PE firm Blackstone likely to own majority in Aster-Care merged entity

While the unlisted Quality Care India is valued at around Rs 16,826 crore ($2 billion) by bankers, Aster DM Healthcare's total market valuation was Rs 18,424 crore as of Monday

Another big-ticket transaction is brewing in the healthcare sector, with US-based private equity (PE) firm Blackstone in talks with the Moopen family, the promoters of BSE-listed Aster DM Healthcare, to merge its 5,000-bed unlisted hospital chain, Quality Care India, with Aster, according to a source familiar with the discussions. If successful, the American PE firm is likely to hold a majority stake in the merged entity.

Quality Care India (QCIL), the unlisted entity, is valued at around Rs 16,826 crore ($2 billion) by bankers, while Aster’s total market valuation was Rs 18,424 crore as of Monday on the stock exchanges.

The promoters of Aster own 42 per cent of the company, with the remainder held by public shareholders.

Aster shares closed flat at Rs 369 per share on Monday.

For 2023-24, Aster, which operates 4,869 beds, reported revenues of Rs 2,036 crore and a profit of Rs 157 crore.

When contacted, a spokesperson for Blackstone declined to comment.

A spokesperson for Aster said on Monday: “We don’t wish to comment on market speculation.”

In April this year, Aster’s businesses in West Asia and India were separated to establish two distinct and standalone healthcare companies. Following the separation, Aster focused on growing its India business through greenfield and brownfield expansions over the next three years.

Currently, Aster operates 19 hospitals, 13 clinics, 223 pharmacies (operated by Alfaone Retail Pharmacies under a brand licence from Aster), and 224 laboratories across five states in India.

In May, Aster announced an expansion plan for Aster CMI Hospital in Bengaluru, increasing its capacity from 500 to 850 beds, with an investment of Rs 250 crore to be completed by 2027.

The healthcare company aims to exceed 6,500 beds in the next two financial years.

“As we progress, we are on track to reach over 6,500 beds by 2026-27, further strengthening our position as a leader in the healthcare sector,” Azad Moopen, founder and chairman of Aster, said last week.

In October last year, Blackstone acquired a 72.5 per cent stake in QCIL from TPG Rise Fund-backed Evercare. At the same time, QCIL signed an agreement to acquire roughly 80 per cent of Kerala Institute of Medical Sciences, a Thiruvananthapuram-headquartered specialised care hospital network offering comprehensive healthcare services, at a valuation of Rs 3,300 crore ($400 million).

In India, Aster and Fortis Healthcare each operate around 4,000 beds, while Apollo Hospitals Enterprises and Manipal Hospitals have over 9,000 and 8,000 operational beds, respectively.

Last year, Temasek Holdings, a Singapore government entity, increased its stake in Manipal Health Enterprises to 60 per cent by investing $1.9 billion in the company.