Private equity major Apax Partners has sold 3.88 per cent stake in Apollo Hospitals Enterprises Ltd, India’s largest hospital company by market value, as it continues its exit from the company. In the recent round, Apax sold the stake for Rs 445 crore ($83 million) on the Bombay Stock Exchange on Thursday.

The latest tranche comes after Apax sold 4.56 per cent stake for Rs 530 crore ($98.3 million) on February 11. According to VCCircle estimates, Apax still owns 3-4 per cent stake including the shares held through GDRs.

According to our estimates, the exit was done at a multiple of over 2.75x in rupee terms. The shares were sold at Rs 824.55 a unit and were acquired by Oppenheimer Funds. Shares of Apollo Hospitals closed at Rs 826.05 a unit, up 0.49 per cent on the BSE in a weak Mumbai market on the back of the Union Budget.

Last year, Apax consolidated its stake in Apollo (which was held by two different entities) under HSTN Acquisition (FII) Ltd. At that time, HSTN held 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.

Apax Partners bought 11 per cent stake in Apollo Hospitals for $100 million in 2007 and later increased its holding through market deals. In April 2008, it further raised its stake in Apollo Hospitals to 14.5 per cent from 12.65 per cent. It 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. But the total stake got diluted to 12.67 per cent due to further share issue. Its average share acquisition cost is pegged at around Rs 300 per unit.

While 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, Apollo Hospitals still remains the top hospital company in India by market cap.

Another major shareholder in Apollo is the Malaysian sovereign wealth fund Khazanah, which holds nearly 11 per cent through Integrated Mauritius Healthcare Holdings.

Apollo Hospitals saw its consolidated turnover rise 21 per cent to Rs 3,147.5 crore, with profit after tax up 19.3 per cent to Rs 219.3 crore during the year ended March 31, 2012. For Q3 FY13, its standalone income grew 20 per cent to Rs 856 crore, with PAT up 25 per cent to Rs 81 crore.

“The healthcare services business growth, which looks stagnant, is well poised to revisit the 18-20 per cent YoY growth path, thanks to the bed addition (800 for FY14) and improvement in the ARPOB (average revenue per occupied bed). We expect healthcare services to grow at a CAGR of 17 per cent between FY12 and FY14E. The pharmacy business is also showing improvement in profitability as more and more pharmacies keep on maturing, thanks to EBITDA optimisation strategies like rationalisation of the store network, buying efficiencies and an increased proportion of self-branded goods,” said a recent ICICI Securities report on Apollo.

Apax’s move comes amid a string of part and full exits by various PE firms from their India portfolio over the past one month. TPG Capital, Warburg Pincus, Carlyle, Clearwater Capital, India Equity Partners and Milestone Capital, among other PE firms, have announced exits.

(Edited by Sanghamitra Mandal)

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