Apollo Hospitals may tap PE firms for $250M expansion plan

Apollo Hospitals Enterprise Ltd, the country's top hospital firm, has said it may look to rope in private equity investors to back its expansion plan which entails an investment of around Rs 1,500 crore (under $250 million) to add capacity in the next two years.

Prathap C Reddy, founder and chairman of Apollo Hospitals, told Business Standard, "One of the options we are exploring is private equity. People are willing to invest; we have to showcase the projects for which we need money. However, our plans on fundraising are yet to be finalised.”

He said the firm is planning to expand its bed capacity by adding 2,000 beds in the coming two years.

If it goes ahead with the funding plan, it would mark another round of fundraising. The company has previously raised funding from Apax Partners and counts Malaysian sovereign wealth fund Khazanah as a shareholder. Apax had exited from the firm a couple of years ago.

Following this KKR invested in a promoter holding firm with an option to swap shares in the listed flagship.

Reddy did not, however, clarify whether the listed firm or the KKR-backed promoter holding firm could raise the fresh funding.

An email sent to the firm seeking more details on the plans did not immediately elicit a response.

In 2013 promoters of Apollo Hospitals raised $89 million (Rs 550 crore) from private equity major Kohlberg Kravis Roberts and its affiliates through PCR Investments. The investment was in the form of a five-year callable security and will be used to repay promoters’ debt and build more hospitals.

KKR subscribed to the convertible debentures issued by PCR Investments with an option to convert these into equity shares of listed flagship Apollo Hospitals at the end of five years. The promoters of the company have the right to buy back these instruments at the end of two years.

Apollo Hospitals recently acquired Nova Specialty Hospitals, the short-stay surgical centres unit of Nova Medical Centers Pvt Ltd, for around Rs 145 crore ($24 million). As per the agreement Nova Specialty Hospital's existing centres will be rebranded as Apollo and will help Apollo in its growth strategy of providing a larger footprint, including in some markets where the company has no presence currently.

The group also has interests in health insurance, global projects consultancy, academic institutions and clinical trials among others and the listed flagship is now foraying into single specialty segment by launching hospitals in cardiology and oncology space.

(Edited by Joby Puthuparampil Johnson)

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