Dubai-based DM Healthcare set to make Rs 300-cr hospital acquisitions

Dubai-based hospital group DM Healthcare is in talks to acquire a mid-sized hospital here. It is also in talks with hospitals in Hyderabad and Bangalore to expand its business in India inorganically.

DM Healthcare has seven hospitals in the Gulf region and four in India. The company owns and manages 156 units, comprising hospitals, medical centres, diagnostic centres and pharmacies, under six brands — Aster, Medcare, Access, MIMS, WIMS and Aster MedCity. In India, the group’s expansion will be based on a ‘hub-and-spoke’ model in tier-II and III cities. By 2015, it aims to have about 4,000 beds at its health facilities in India and the Gulf, against the current 1,500 beds.

Speaking to Business Standard, DM Healthcare Chairman Azad Moopen said, “We are likely to close the buyout transactions by next month. There is a possibility to acquire three hospitals in Mumbai, Bangalore and Hyderabad together, for a value of Rs 300 crore.” He added the company would float an initial public offering (IPO) of about Rs 1,000 crore by the first quarter of 2014-15 either on the London Stock Exchange or Indian exchanges. For the IPO, the company has appointed Bank of America Merrill Lynch, JP Morgan and Goldman Sachs as bankers.

Together, private equity majors Olympus Capital and India Value Fund Advisors own about 40 per cent stake in DM Healthcare. In early 2012, Olympus had invested $100 million in DM Healthcare for a minority stake.

The group has announced an investment of $300 million (Rs 1,800 crore) on various projects in West Asia and Africa, and $300 million in India through the next five years. In India, DM plans to add another 1400 beds under various India verticals such as MIMS Kannur (250), MIMS Perinthalmanna (200),

Aster Medcity Kochi (575), MIMS Calicut (225) and MIMS Kottakkal (125). Aster Medcity's second phase development will add another 475 beds. Under the India unit, apart from 4 hospitals (Calicut, Kottakkal, Pune and Kholapur), DM healthcare is operating 3 eye care centres in Delhi NCR under the brand Aster Eyecare.

The huge gap between demand and supply in healthcare system in India forces the hospital majors to expand the business rapidly. India has a ratio of nine hospital beds per 10,000 people against 33 beds in the UK and 30 beds in the US. It also lags behind those of fellow BRIC nations China and Brazil, with 42 and 24 beds, respectively. The healthcare market in India is estimated to be $78 billion and has been growing at 11%, on average, from 2008 through 2012.