KOCHI: Less than a year after splitting its GCC business, Aster DM Healthcare has announced plans to merge with Quality Care India Ltd (QCIL) to establish a new healthcare venture, Aster DM Quality Care Ltd.
Once the merger is through, the combined entity will have a network of 38 hospitals and 10,150+ beds spread across 27 cities making it one of the top 3 hospital chains in India.
The two entities have signed definitive agreements for the merger, which is subject to regulatory, corporate, and shareholder approvals.
The resulting merged listed entity will be called Aster DM Quality Care Ltd, creating one of India’s top 3 hospital chains in terms of revenue and bed capacity.
The merger is expected to result in significant strengths including scale, diversification, enhanced financial metrics, synergies, increased growth potential, and backing of marquee PE investors.
Aster shareholders to own 57.3%
The transaction has valued Aster 45 per cent higher than QCIL. Based on the agreed swap ratio, Aster shareholders will hold 57.3 per cent and QCIL shareholders will hold 42.7 per cent in the merged entity.
The merged entity will be jointly controlled by Aster promoters and Blackstone, holding 24 per cent and 30.7 per cent ownership respectively.
Ahead of this merger, Aster shall purchase 5 per cent stake in QCIL from Blackstone and TPG in consideration of primary share issuance by Aster for 3.6 per cent stake (Initial Share Acquisition).
Post the Initial share acquisition, QCIL will be merged into Aster by way of a scheme of amalgamation.
Dr Azad Moopen will continue in his role as the executive chairman and will oversee the merged entity whereas. Varun Khanna, Group MD of Quality Care, will be the MD and Group CEO of the merged entity – Aster DM Quality Care Ltd.
Four leading brands, 38 hospitals
With this merger, Aster DM Quality Care Ltd (ADQCL) will have a combined portfolio of four leading brands: Aster DM, CARE Hospitals, KIMSHEALTH and Evercare.
There will be significant opportunities for both brownfield and greenfield expansion with about 3,500 new beds expected to be added between FY24-27.
Aster DM Quality Care Ltd will have the rare distinction of being backed by global marquee investors – Blackstone and TPG, regarded among the world’s largest alternative asset managers, highly reputed in the Indian public markets having backed numerous companies in the listed space.
Among top players
Dr Azad Moopen, founder and chairman of Aster DM Healthcare, said, “The new combined entity ‘Aster DM Quality Care Ltd.’ is poised to become one of the largest healthcare players in the industry, setting new benchmarks in patient-centric care, innovation, and accessibility.”
Amit Dixit, Head of Asia for Blackstone Private equity, said the new healthcare major created through the merger is 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,” Blackstone head added.
Board representation
Subject to necessary approvals, (i) Aster Promoters and Blackstone will hold equal representation on the board and jointly oversee the Merged Entity; (ii) Dr Azad Moopen will continue as the Executive Chairman of the Merged Entity; (iii) Varun Khanna and Sunil Kumar will be promoted to the position of MD & Group Chief Executive Officer and Group Chief Financial Officer (CFO) of Aster DM Quality Care Ltd respectively.
Entities advised deal
Moelis & Company and Advay Capital acted as financial advisors, with Kotak Investment Banking as corporate advisor and Cyril Amarchand Mangaldas as legal counsel to Aster.
Blackstone and TPG, on behalf of QCIL, were advised by NovaaOne Capital as their financial advisor with Trilegal and JSA acting as legal counsel. PwC recommended the swap ratio as an independent registered valuer and ICICI Securities provided the fairness opinion on the swap ratio.
