Azad Moopen To Head Aster DM-Care-KIMS Hospitals After Potential Merger?
Blackstone, a global private equity major, invested over $1 billion (₹8,300 crore) acquiring controlling stakes in Indian hospitals in May last year. Blackstone invested in two leading South Indian hospital chains – Hyderabad’s CARE Hospitals, and Kerala’s KIMS (Kerala Institute of Medical Science) Health, to emerge as the fourth largest hospital group in India.
Now, the CARE Hospitals and Aster DM Healthcare are expected to warp a substantial healthcare conglomerate through merging. The new entity is likely to be named as Aster DM Quality Care Pvt. Ltd.
Reports have suggested that Dr Azad Moopen, the founder of Aster DM Healthcare is expected to continue with the role of executive chairman, with a joint management team overseeing the merged operations. However, as per a source close to Blackstone, the hospital chain will be run by a professional management team, if the merger happens. The source has also confirmed that there is no deal signed between KIMS and Aster.
The merger, according to reports, will primarily involve a share swap, with a ratio of 50:50, showing an equal exchange of shares between Aster DM Healthcare and Care Hospitals. It will be filed with the National Company Law Tribunal.
The deal is currently under regulatory review and will require approval from competition authorities, said a Business Today report. Exact details on the power swap are still under discussion.
The new potential merger has an intriguing factor to its structure. Instead of cash, the deal is being made through share swap. This means that Azad Moopen and family, who currently holds 42 percent stake in Aster DM will obtain shares in the new entity. In return, Blackstone will acquire a stake in Aster DM Healthcare, and the Moopen family’s stake in the healthcare will be diluted as Blackstone’s stake increases, according to reports.
The investments of Blackstone in CARE Hospital and KIMS Hospitals – a multi-phased twin transactions – also marked the introduction of the world’s largest PE (Private Equity) fund in India’s fast-growing healthcare space.
Due to its strong market position, Aster DM Healthcare, which is valued at approximately ₹19,068 crore ($2.27 billion), is expected to be valued at a premium. Care Hospitals, which was valued at over ₹16,800 crore ($2 billion), will add further weight to the merged entity.
The Blackstone has completed the acquisition of over 73 percentage stake in the Quality Care India Ltd (QCIL), the holding company that owns CARE Hospital chains. It was bought for around ₹6,640 crore ($800 million) from Evercare, a platform of TGP Rise funds (Texas Pacific Group – a private equity giant). TGP Rise funds continue to hold about 25 percent stake in QCIL. As per media reports, QCIL invested $400 million to acquire an 80 percentage stake in KIMS Health.
Reportedly, after taking over the helm of CARE Hospitals, Blackstone, and TGP, have jointly used it as a medium to sign a definitive agreement for bagging the majority stake of 80 percent of Kerala’s KIMS Health hospital chain. Through this, Blackstone also bought out the entire 61 percent stake of True North, a home-grown private equity investor.
Before Blackstone took over KIMS, the latter made one of the largest acquisition in Kerala in 2014, when it bought Al Shifa Hospital for an enterprise value of Rs 300 crore in 2014. Al Shifa is another key player in the sector in Kerala.
However a business consultant who is familiar with the KIMS-Al Shifa deal said that Al Shifa may not be part of the merger, and only KIMS’ share would be part of the new entity. The merger will have investments in KIMS, but not Al Shifa, the source said.
At the same time, KIMS continued to operate under the leadership of DR M. I. Shadullah – Founder, Chairman and managing Director of KIMS Health. He retained 20 percent stake in the chain. Things might change with the new developments.
The merger would place the new entity as a major player in the field. While Aster DM currently operates with over 5,000 bed capacity, CARE Hospitals also offers around 5,000 bed capacities. The merging of these would come up with a formidable healthcare network with over 10,000 bed capacity. This may take the new entity to another level of competition against Apollo Hospitals, the front runner in the field.
Dr Azad Moopen, born on April 15, 1953, is a prominent Indian healthcare entrepreneur and the founder, chairman, and managing director of Aster DM Healthcare. A former medical lecturer at Government Medical College, Kozhikode, Moopen moved to Dubai in 1987, where he established a single-doctor clinic. Over the next three decades, Aster DM Healthcare expanded into one of the largest integrated healthcare service providers in the Middle East and India, operating more than 377 facilities across eight countries. The conglomerate now reportedly employs over 20,000 people, including nearly 3,000 doctors, providing medical care to millions.
Dr Moopen has received numerous accolades for his contributions, including the Padma Shri (2011) and the Pravasi Bharatiya Samman (2010) from the Government of India, as well as the Arab Health Award for his outstanding contribution to the Middle East healthcare industry.
Timeline contacted KIMS Health and Aster DM Hospital to comment on the development, we are yet to receive a response.
