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April 28, 2024

Apollo Hospitals Plans Rs 3,000 Crore Investment After Advent International Deal

Apollo Hospitals Enterprise (AHEL) is gearing up for significant expansion following the Rs 890 crore deal with Advent International. This investment will fuel both organic and inorganic growth, setting the stage for a transformative period for the company.

With an infusion of Rs 2,475 crore from Advent, AHEL is set to see investments totaling Rs 3,000 crore over the next three years. This will translate to an addition of approximately 700 beds annually, bolstering Apollo’s presence in the healthcare sector.

The merger with Advent is expected to act as a ‘change agent,’ according to a top Apollo executive. Advent’s investment in Apollo HealthCo, a wholly-owned subsidiary of AHEL, will facilitate significant expansion. This includes merging Keimed, a wholesale distribution company owned by Apollo Group promoters, into Apollo HealthCo.

Out of the total consideration, Rs 860 crore will be allocated for the expansion of Apollo HealthCo, while Rs 890 crore will return to AHEL. Advent will secure a 12.1% stake in the merged entity through compulsory convertible instruments over two tranches, valuing the combined entity at Rs 22,481 crore.

Krishnan Akhileswaran, the company’s chief financial officer, emphasized the opportunity for organic and inorganic growth in Apollo’s core strategic markets. He highlighted the potential for growth in digital healthcare (Apollo 24/7) and the pharmaceutical distribution business within Apollo HealthCo.

The combined entity is projected to achieve Rs 25,000 crore in revenue within three years, with a significant increase in EBITDA to 7-8%. This growth will be driven by Apollo 24/7 reaching breakeven within six to eight quarters, improved margin realization through supply chain efficiencies, and accelerated growth in the private label business.

Akhileswaran also highlighted the positive impact of the Keimed merger, which will expand the number of pharmacies to 70,000, enhancing value for Apollo shareholders.

In Chennai, AHEL is set to develop a 500-bed Med City on Old Mahabalipuram Road with an investment of around Rs 950 crore. This state-of-the-art facility will offer leading clinical programs in cardiology, oncology, neuroscience, orthopedics, and more, with a focus on attracting international tourism.

Apollo’s plans also include expanding its presence in the pharmacy segment, capitalizing on India’s growing pharmaceutical market. With Apollo Pharmacy experiencing rapid growth, the company aims to achieve a 20-25% increase in this business in the long term.

In summary, the Rs 3,000 crore investment plan reflects Apollo Hospitals’ commitment to growth and innovation, positioning the company for sustained success in the dynamic healthcare industry.


Jhumpa Lahiri

Jhumpa Lahiri

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