Advent to Invest Rs 2,475 Crore in Apollo HealthCo: A Game-Changer Deal
Advent International, a private equity firm, has made a significant investment of Rs 2,475 crore into Apollo HealthCo, a wholly-owned subsidiary of Apollo Hospitals Enterprise (AHEL). This deal is set to bring about a transformation in the healthcare sector, with Apollo Hospitals planning to utilize the funds for both organic and inorganic expansion.
According to a top executive from Apollo Hospitals, the investment from Advent will enable the addition of around 700 beds per year, leading to a substantial increase in the hospital chain’s capacity. The merger of Keimed, a wholesale distribution company owned by the Apollo Group promoters, into Apollo HealthCo is also expected to enhance the company’s operations and market presence.
The infusion of funds will be used for the growth of Apollo HealthCo as well as for the parent company AHEL. Advent will secure a 12.1% stake in the merged pharmacy entity through compulsory convertible instruments, with an enterprise value of Rs 22,481 crore.
The combined entity is projected to achieve a revenue of Rs 25,000 crore in three years, with a significant increase in Ebitda. This growth will be driven by factors such as the breakeven of Apollo 24/7 in six to eight quarters, improved margin realization through supply chain efficiencies, and accelerated growth in the private label business.
Additionally, Apollo Hospitals is planning to establish a 500-bedded Med City in Chennai, with an investment of around Rs 950 crore. This facility will focus on specialized clinical programs in areas such as cardiac, oncology, neuroscience, and orthopedics, catering to both domestic and international patients.
The merger with Keimed is expected to boost the number of pharmacies to 70,000, providing added value for Apollo shareholders. With the growing demand for healthcare services in India, Apollo Hospitals aims to capitalize on the expansion opportunities in the pharmacy segment, targeting a growth rate of over 20-25% in the long term.
Overall, the collaboration between Advent International and Apollo HealthCo signifies a significant milestone in the healthcare industry, paving the way for enhanced services, expanded infrastructure, and sustainable growth in the coming years.