Aster DM to pay up to Rs 120 a share dividend on Gulf business sale

Hospital chain Aster DM Healthcare announced on Monday that it will pay a dividend ranging from Rs 110 to Rs 120 to shareholders on account of the sale of its Gulf business.

"After deliberations regarding future expansion plans, capital expenditure requirements, and cash reserves, the board desires to consider distributing 70-80 per cent of the upfront consideration of $903 million as a dividend to its shareholders, in the range of Rs 110 to Rs 120 per share. The proposed declaration of the dividend by the company is subject to completion of the transaction, including the receipt of shareholder approval for the transaction," the Dubai-based firm stated in a stock exchange notification on Monday.

Shares of Aster last closed at Rs 399, valuing the firm at nearly $2.4 billion.

In November, Aster DM had announced its plans to sell its wholly-owned subsidiary Affinity Holdings, which conducts business in the Gulf Cooperation Council (GCC) region, to Alpha GCC for $1 billion. Alpha GCC is 65 per cent owned by Gulf-based private-equity firms led by Fajr Capital, with the remaining 35 per cent held by the promoter group, the Moopen family.

The e-voting on the two resolutions pertaining to the sale of the GCC business will remain open until January 22.

Both voting advisory SES and IIAS have now “for” recommendations on the resolutions. 

IIAS had earlier issued an 'against' recommendation due to a lack of clarity on the utilization of sale proceeds. 

“Following the additional disclosures by Aster and their commitment to disburse 70% of the sales  proceeds to shareholders, we have changed our voting recommendations from AGAINST to FOR,” it said while issuing a revised note. 

Aster DM Healthcare operates in various segments such as hospitals, clinics, diagnostic centers, and retail pharmacies in India and various GCC states. In FY23, the company derived 75 per cent of its revenue and 71 per cent of its EBITDA from the GCC region and the rest from India. The group derives 55 per cent of its revenue from hospitals, 25 per cent from pharmacies, and 20 per cent from its clinics in FY23 data.

Aster DM has stated that the sale of the GCC business was concluded "after a year-long independently and professionally run bidding process involving in excess of 40 interested parties and multiple competing offers." It further noted that the valuation of the GCC business under the deal was also significantly better than the valuation provided by various research houses to the GCC business prior to the deal announcement.