Aster DM Healthcare soars 15%; hits new high on stake sale plan in Gulf biz

Shares of Aster DM Healthcare hit a new high of Rs 382, as they rallied 15 per cent on the BSE in Wednesday’s intra-day trade on the back of heavy volumes after the company announced on Tuesday that its subsidiary would sell its stake in Aster DM Healthcare FZC to Alpha GCC for $1.01 billion (Rs 8,125 crore). The planned move is part of Aster’s strategy to separate its India and Gulf businesses to unlock value.

In the process, the stock of hospital firm surpassed its previous high of Rs 371.25 touched on October 25, 2023. At 10:28 AM; the stock was trading 10 per cent higher at Rs 364.95 on the BSE. The average trading volumes at the counter jumped over 10-fold today. A combined 6.5 million equity shares of the company had changed hands, so far, on the NSE and BSE.

Aster DM Healthcare is a leading integrated healthcare service provider across six countries in the GCC (Gulf Co-Operation Council). 

In exchange filing, Aster DM Healthcare said that the board approved the separation of Aster’s India and GCC businesses, subject to regulatory and corporate approvals including Aster India’s shareholders’ approval. The separation plan will unlock value for the shareholders by allowing both the India and GCC businesses to adopt a market-focused strategy and create sustained long-term growth, the company said.

Under the separation plan, a consortium led by Fajr Capital has entered into a definitive agreement to acquire a 65 per cent stake in the ownership of the GCC business, Aster DM Healthcare FZC. The Moopen family will continue to manage and operate the GCC business retaining a 35 per cent stake, on and from closing.

The current market cap of the combined India and GCC business stands at ~$2.0 billion. The transaction values the GCC business at an enterprise value of $1.7 billion (Rs 13,540 crore), and an equity value of $1.0 billion (Rs 8,215 crore).

The company further said existing shareholders to remain with the listed Indian entity, Aster DM Healthcare upon successful completion of the proposed transaction, the company is desirous of declaring dividends to the shareholders of Aster DM Healthcare from the proceeds, subject to approvals required under law.

The GCC and India healthcare markets are distinct and have different growth dynamics, warranting different business strategies. With a population strength of 1.4 billion, India will remain a priority market in Aster DM Healthcare’s growth journey.

The company plans to ramp-up bed capacity in India by almost one-third, by adding more than 1,500 beds by FY27. In the GCC, Aster DM Healthcare FZC will bolster its expansion plans in key markets, such as the UAE and Saudi Arabia, while enabling greater access to quality and comprehensive healthcare across physical and digital channels.