IHH Healthcare Berhad, majority owned by Malaysian sovereign wealth fund Khazanah Nasional Berhad, has sold its entire stake in India’s largest hospital chain operator Apollo Hospitals Enterprise Ltd.
The Malaysian healthcare conglomerate sold 6.65 million shares, or a 4.78% stake, in Apollo Hospitals for around Rs 830 crore ($128 million) via two block trades on Thursday at Rs 1,246 per share, stock-exchange data showed. Shares of the hospital chain fell 2.41% to Rs 1,250.75 apiece on the BSE.
Adding this to its partial exit in March 2017, when it sold a little over a 6% stake for Rs 1,070 crore, IHH has pulled out around Rs 1,900 crore ($290 million) from its investment in Apollo Hospitals. That’s about twice its investment in the hospital chain.
In a regulatory disclosure following its partial exit in March 2017, IHH had said that its accounting cost of investment in Apollo Hospitals was around $160 million and thereby it has taken out the principal amount. At that point, it had said its remaining stake was worth $120 million.
The firm slightly exceeded its own estimates on the returns made from Apollo Hospitals. In a statement on Friday, IHH said its total gain from the Apollo exit is around 559 million Malaysian ringgit, or about $290 million. It added that it will use the proceeds for working capital needs.
The trade ends Khazanah’s 12-year run with Apollo Hospitals. Khazanah had initially picked up a stake in Apollo Hospitals for Rs 293 crore in 2005 through a secondary deal and later hiked its holding in 2008. It is estimated to have spent around Rs 400 crore to buy the stake.
Subsequently, IHH Healthcare had picked up close to an 11% stake in Apollo Hospitals in 2011 through inter-se transfer from its parent Khazanah, after which IHH Healthcare listed on the Bursa Malaysia and the Singapore Exchange.
However, IHH Healthcare’s independent acquisitions in India ended irking the Reddy family that runs Apollo Hospitals, The Economic Times reported in 2015.
In 2015, IHH bought a majority stake in Hyderabad-based Continental Hospitals and Bangalore-based Global Hospitals in back-to-back deals. Both the firms compete with Apollo Hospitals in their respective markets.
In March this year, at the time of its first partial exit, IHH had said that it was rationalising its existing Indian investments because of its acquisition strategy.
“…Having acquired Ravindranath GE Medical Associates Pvt. Ltd (Global Hospitals) and Continental Hospitals Pvt. Ltd group in 2015, IHH Group is consolidating and rationalising its investment to these operating companies in India as its fourth home market,” it said then.
IHH Healthcare also has an equal joint venture with Apollo Hospitals in two hospital assets—Apollo Gleneagles Hospital in Kolkata and Apollo Gleneagles PET-CT Centre in Hyderabad.
*This article has been updated to include a comment from IHH Healthcare.