Private equity major Apax Partners appears to have rejigged its entire 12.67 per cent stake in India’s largest hospital company by market value Apollo Hospital Enterprises Ltd through market deals worth over Rs 1,033 crore($207 million). Apax’s stake, held through two different entities, is now housed under a new single unit with these transactions.
Apax held 10.48 per cent through Apax Mauritius FDI One Ltd and the remaining 2.19 per cent through Apax Partners Europe Managers Ltd, as of December 31, 2011. The holding has now been acquired by HSTN Acquisition (FII) Limited, a sub-account for Apax Partners Europe, according to Sebi website.
The reason for such a holding rejig could not be immediately ascertained. But, typically, such a move is associated with tax considerations or expiry of fund tenure where PE firms choose not to exit the investments but transfer the investment to another younger fund.
An email and a text message sent by VCCircle to Apax spokespersons did not elicit a response till the time of writing this report.
However, Apollo Hospitals clarified in a disclosure that the deal “represents an inter-se transfer within their funds as advised by Apax Partners.”
HSTN Acquisition (FII) Ltd will hold 10 per cent stake as direct equity investment in the company and the balance 2.67 per cent in the form of GDRs which were acquired pursuant to the two way fungibility scheme, added the statement.
Apollo Hospitals scrip was quoting at Rs 616.05 a share in mid-day trades on Tuesday on BSE, up 1.31 per cent. The shareholding rejig was done at Rs 606.6 by Apax on Monday.
At this price, Apax is sitting on unrealised gains of 2x on its original investment five years ago. Apax Partners bought 11 per cent stake in Apollo Hospitals for $100 million in 2007 and increased its holding through market deals later.
In April 2008, Apax Partners raised its stake in Apollo Hospitals to 14.5 per cent from 12.65 per cent. Apax acquired 1.87 per cent stake from the open market through two of its funds – Apax Mauritius FII Ltd and Apax Mauritius FDI One Ltd. This later got diluted to 12.67 per cent due to further share issue.
Its average share acquisition cost is pegged at around Rs 300 per share. Fortis Healthcare has overtaken Apollo Hospitals in terms of total global revenues as well as bed strength after merging a privately held South East Asian hospital chain owned by its promoters. But Apollo Hospitals remains the top hospital company in India by market cap.
Another major shareholder in Apollo is Malaysian sovereign wealth fund Khazanah, which holds over 11 per cent through Integrated Mauritius Healthcare Holdings.
Apollo Hospitals saw its turnover rise from Rs 600.87 crore as on 31, December 2010 to Rs 714.75 crore for quarter ended December 2011. The company recorded a net profit of Rs 64.65 crore for the quarter ended 31 December as against Rs 45.81 crore in the year ago period.