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DEAL INKED WITH FAJR CONSORTIUM

Aster splits India, GCC units; sells strategic stake for $1bn

DUBAI, November 28, 2023

Aster DM Healthcare, one of the largest integrated healthcare providers in GCC and India, said it has secured approval from its company board as well as that of its subsidiary Affinity Holdings Private Limited to separate the India and GCC businesses into two distinct and standalone entities.
 
This separation plan will unlock value for the shareholders by allowing both the India and GCC businesses to adopt a market-focused strategy and create sustained long-term growth.
 
Under this, Aster has agreed to sell a majority stake in its Gulf business to a consortium of investors led by Fajr Capital, a sovereign-owned private equity firm headquartered in the UAE, for $1 billion.
 
The Fajr consortium includes Emirates Investment Authority, Al Dhow Holding Company (the investment arm of AlSayer Group), Hana Investment Company (a subsidiary of Olayan Financing Company) and Wafra International Investment Company as partners.
 
A leading hospital chain, Aster DM Healthcare was established by Dr Azad Moopen in 1987 as a single clinic in Dubai. Since then, it has grown to become a leading integrated private healthcare provider, offering a full spectrum of primary, secondary, tertiary and quaternary healthcare services that cater to the diverse needs of its patients. 
 
In India, Aster has a substantial and growing network in 5 South Indian states through its 19 hospitals, 13 clinics, 226 pharmacies and 251 patient experience centres. 
 
Meanwhile, in the Gulf, Aster has developed a strong reputation and presence, with 15 hospitals, 118 clinics and 276 pharmacies across the UAE, Saudi Arabia, Qatar, Oman, Bahrain and Jordan.
 
According to Aster, both the India and GCC entities will be operated by separate dedicated management teams and will also benefit from a dedicated investor base that will aid future growth in the Indian and GCC markets respectively, both of which hold significant growth potential.
 
Post completion, Dr. Azad Moopen will continue as the Founder & Chairman of Aster overseeing both India and GCC entities, while Alisha Moopen will be promoted to the post of Managing Director and Group CEO of the GCC business to lead a long-term strategy that will unlock value as a pure-play GCC operating company. 
 
The Indian entity will continue to be led by Dr. Nitish Shetty as Chief Executive Officer, who will focus on the growth of the India business, aimed at creating value for its shareholders.
 
Dr Moopen said: "The strategic decision to segregate the India and GCC operations was based on the rationale to establish fair value for both entities, creating two pure-play geographically focused entities that are able to leverage the growth opportunities in their respective markets."
 
"In India, we as promoters, remain committed to our growth plans and hence had increased our stake to 42% earlier this year. Major institutional shareholders continue to remain invested, reflecting overall confidence in the Company’s India business model and go-to-market strategy spanning all segments of the healthcare space," he stated.
 
The GCC and India healthcare markets are distinct and have different growth dynamics, warranting different business strategies. With a population strength of 1.4 billion, India will remain a priority market in Aster DM Healthcare’s growth journey. 
 
The company plans to ramp up bed capacity in India by almost one-thirds, by adding more than 1500 beds by FY27. In the GCC, Aster DM Healthcare FZC will bolster its expansion plans in key markets, such as the UAE and Saudi Arabia, while enabling greater access to quality and comprehensive healthcare across physical and digital channels, he added. 
 
"For the GCC, Fajr Capital has been selected by the board of Affinity as our trusted private equity partner to lead a consortium of investors to invest in the GCC business. We are confident given their demonstrated expertise and are excited by their commitment to empowering our expansion plans within the GCC’s dynamic healthcare landscape, especially in Saudi Arabia."
 
According to him, the Moopen family will retain 35% stake in the GCC Business. "Together, we envision a future where Aster’s business in the GCC continues to deliver best-in-class healthcare services to its patients across the region, underpinned by Fajr Capital’s strong market presence and network. Alisha will lead on these ambitions and oversee the next phase of our growth trajectory in the GCC,." he added.
 
On the strategic move, Alisha said: "While the India business of Aster DM Healthcare has made steady progress in growing multifold within a short period of time, the segregation will enable our GCC operations to seize a significant opportunity to unlock value through its geographic expansion, diversify revenue through targeting different economic segments, while expanding into tertiary care and digital health."
 
"In our journey with the GCC business, we are glad to be joined by Fajr Capital who are renowned for their expertise in facilitating business growth. With our upcoming expansions in the KSA market, we are confident that their strategic counsel would be of utmost value," she added.
 
Fajr Capital CEO Iqbal Khan said: "The Moopen family has built a world-class company, with a rich legacy of delivering high quality healthcare to millions of patients. Large family-led platform businesses is an area where we have deep experience and we believe that Aster has significant potential to meet the growing demand for integrated healthcare services across the Gulf region."
 
Dr Shetty said: "The Indian healthcare market presents an unprecedented growth opportunity as our citizens seek quality healthcare services at affordable cost. Aster DM Healthcare has perfected a carefully designed healthcare ecosystem, spanning the entire patient life cycle."
 
"The company is uniquely positioned to provide holistic healthcare solutions, including primary, secondary, tertiary, and quaternary care and investing heavily in new-age technology like Artificial Intelligence and Machine Learning to bring innovative medical solutions to the forefront, addressing critical healthcare challenges and contributing to improving patient outcomes," he noted. 
 
"Our five-year topline and bottom-line CAGR is a testament to the robustness of this business model. The restructuring provides the Indian balance sheet with the flexibility to align its capital allocation policies to emerging growth opportunities," he added.
 
EY and PwC provided independent valuation advice and ICICI Securities provided fairness opinion for the valuation guidance. Baker & McKenzie was Affinity’s lawyers on the transaction. 
 
Cyril Amarchand Mangaldas was Aster’s lawyer on the transaction. AZB & Partners were the advisors to independent directors. Moelis & Company and Credit Suisse acted as the sell-side advisors. HSBC Bank Middle East Ltd., Allen & Overy LLP and PwC acted on behalf of the Fajr Capital consortium.-TradeArabia News Service



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