 "Aster DM adds Quality to ranks in India's biggest health care deal")
Aster DM Healthcare has announced a merger with Blackstone-backed CARE Hospitals with the Bengaluru-based company, leading to the creation of Aster DM Quality Care, which will be among the top three players in India with 38 hospitals and a presence in 27 cities of the country.
On Friday, Aster DM said in a stock exchange filing it would acquire 19 million equity shares of Quality Care India (QCIL) from Blackstone and Centella at Rs 445.8 per share by issuing 18.6 million of its own shares to QCIL’s shareholders at Rs 456.33 per share.
The enterprise value of the merged entity will be $5 billion (Rs 43,000 crore). Its revenue will be Rs 7,314 crore.
Aster expects the merger transaction to close by the third quarter of 2025-26.
Aster is valued at a multiple of 36.6 in terms of FY24 metrics. In comparison, QCIL is valued at a multiple of 25.2 based on the numbers pertaining to the same period.
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Based on the swap ratio recommended in the valuation report, the Aster promoters will hold 24 per cent and Blackstone 30.7 per cent in the merged entity with the balance 45.3 per cent held by the public and other shareholders.
Ahead of this merger, Aster will purchase a 5 per cent stake in QCIL from Blackstone and TPG in exchange for primary share issues by Aster for a 3.6 per cent stake (initial share acquisition). After the initial share acquisition, QCIL will be merged into Aster through amalgamation. QCIL shareholders will be issued Aster DM shares in the agreed swap ratio, that is, for every 1,000 shares of QCIL, QCIL shareholders will get 977 shares of Aster.
The other two players in the top three hospital chains are the Apollo group and Manipal Hospitals. The merged entity has planned adding 3,500 beds by FY27, taking its bed capacity to 13,300.
The transaction requires shareholder and regulatory approval. The ratio for initial share acquisition is the same as proposed for the merger. At present, the Moopen family holds 42 per cent in Aster DM, and the remaining 58 per cent is public shareholding. On the other hand, in QCIL, Blackstone holds 72 per cent, TPG around 24 per cent, and others 4.2 per cent.
“The combined entity is poised to become one of the largest health care players in the industry, setting new benchmarks in patient-centric care, innovation, and accessibility. The Moopen family … will also lead the new merged entity. Thus, by combining the strengths of two pioneers, we are not only expanding our footprint but also creating a transformative force capable of reshaping the healthcare landscape,” said Azad Moopen, founder and chairman of Aster DM Healthcare. While Moopen will continue as executive chairman of the merged entity, CARE Hospitals’ Varun Khanna will be managing director and group chief executive officer of the new entity.
Amit Dixit, head of Asia for Blackstone Private Equity, said: “We are committed to creating one of India’s leading platforms in the healthcare sector. It is in our DNA to be a builder of businesses – using our scale, operational expertise, and global life sciences insights, we will help grow the platform, expand its footprint, and develop it into a world-class healthcare institution. We are excited to partner with the Moopen family, which shares our values and strong governance standards. We believe Varun Khanna is a terrific leader and can help build the combined entity.”
Vishal Bali, senior advisor at TPG, said: “Health care has long been a thematic focus for TPG globally and in India, and we are pleased to see Quality Care’s partnership with Aster to create one of India’s top three multi-specialty hospital chains.”
In October last year, Blackstone acquired 72.5 per cent in Quality Care India, which operates CARE Hospitals and Kerala's KIMS Health, for around $1 billion. Aster also separated its Gulf Cooperation Council (GCC) business last year and has plans to add 1,700 more beds by FY27.