Apax Partners sells more stake in Apollo Hospitals; part-exit multiple nudges up

Private equity major Apax Partners has sold a little less than 1 per cent stake in Apollo Hospitals Enterprises Ltd, India’s largest hospital company by market value. The PE firm sold 0.92 per cent stake on Friday for Rs 128 crore on the National Stock Exchange, continuing its exit process started in February.

Apax, through its arm HSTN Acquisition (FII) Ltd, sold over 1.28 million shares of Apollo Hospitals for Rs 995.34 per unit. Apollo’s scrip closed at Rs 1,003.45 on Friday and was trading at Rs 1,002.05, down 0.14 per cent on Monday.

In the current round of exit, Apax is making over 3.3x on its investment, compared to a multiple of 2.7x-2.75x during the block trades in February. The PE firm still holds around 2.2 per cent stake in Apollo Hospitals. With the sale of its remaining stake, Apax could be looking at overall multiple of around 3x on the investment.

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 share.

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 remains the top hospital company in India by market cap.

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

Apollo Hospitals reported 19.7 per cent increase in consolidated revenues to Rs 3,769 crore with profit after tax (PAT) up 38.5 per cent to Rs 304 crore for FY13, as compared to the previous year.

(Edited by Sanghamitra Mandal)

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