Apollo Hospitals to bring down promoter-pledged shares to 25-30%

Apollo Hospitals Enterprise Ltd (AHEL) may see the promoter-pledged shares in the company coming down to around 25-30 per cent by the end of January, with the HDFC's proposed acquisition of the Apollo Hospital Group's shares in Apollo Munich Health Insurance Company Ltd (AMHI) getting necessary regulatory approvals.

AHEL said on Thursday that AMHI, HDFC and HDFC Ergo General Insurance Company Ltd had received requisite approvals for the acquisition from the Competition Commission of India, the Reserve Bank of India and more recently, from the Insurance Regulatory and Development Authority of India (IRDAI) on January 1, 2020. The acquisition of shares by HDFC is expected to be completed by January 9, 2020, said AHEL.

With this, it is expected that the promoters and promoter group companies will release a portion of the pledged shares, bringing the share down to around 25-30 per cent from the present around 58 per cent, before the end of January, according to a senior official.  

The promoters had at one point pledged more than 70 per cent of their shares, and later raised nearly Rs 700 crore by selling around 5 million shares to reduce the number of pledged shares.

Of the 51.2 per cent stake which Apollo Hospitals Group and a few employees are selling in AMHI to HDFC for Rs 1,347 crore, the listed entity AHEL holds around 9.96 per cent. The sale is expected to bring the listed entity a cash consideration of Rs 261.52 crore (subject to indemnity related and other contractually agreed deductions) and Rs 38.22 crore from Munich Health Holding AG towards joint-venture termination fee. This money will be used to bring down the debt.

Moreover, the transfer of the front-end of AHEL's pharmacy business to Apollo Pharmacies Ltd is expected to conclude before the end of the current fiscal year. This will also bring in some funds, which would be used to repay the debt. The company is expecting to bring down the net debt from the current levels of around Rs 3,100 crore to around Rs 2,600 crore by the end of the fiscal, once the Apollo Pharmacy deal is over.