Apollo Hospitals Enterprise plunges 6% after firm announces fund-raising deal with Advent Internationa
Upstox
2 min read • Updated: April 29, 2024, 12:35 PM
Summary
Apollo Hospitals Enterprise also said it will merge Keimed with Apollo 24/7 in a phased manner over the next 24-30 months. Advent would be investing in compulsory convertible instruments over two tranches to secure a 12.1 % stake in the merged entity, valuing the combined entity at an enterprise value of ₹22,481 crore
Shares of Apollo Hospitals Enterprise plunged over 6% on Monday after the company reported its subsidiary Apollo HealthCo (AHL) entered into a binding agreement to raise equity capital of ₹2,475 crore from private equity investor Advent International.
Advent would be investing in compulsory convertible instruments over two tranches to secure a 12.1 % stake in the merged entity, valuing the combined entity at an enterprise value of ₹22,481 crore. Apollo HealthCo is valued at an enterprise value of ₹14,478 crore.
In addition, Apollo Hospitals said it will merge Keimed with Apollo 24/7 in a phased manner over the next 24-30 months. Keimed is a wholesale pharma distributor serving over 70,000 pharmacies across 18 states with a presence across all key markets. The merged entity will have a pan-India presence and the potential to unlock significant business synergies, it said. The company believes its merger with Keimed is estimated to be earnings per share (EPS) accretive from the first year itself.
Keimed is valued at an enterprise value of ₹8,003 crore and following the merger, its shareholders will hold a maximum of 25.7% stake in the combined entity, while Apollo Hospitals Enterprise would continue to remain the largest controlling shareholder with at least 59.2% stake.
Suneeta Reddy, Managing Director at Apollo Hospitals Enterprise said the merger of Keimed is a significant step in the integration of the comprehensive supply chain. “The combined entity will deliver ₹25,000 crore of revenue in three years with 7-8% earnings before interest, tax, depreciation and amortisation (EBITDA). This deal brings together a formidable partnership of capabilities and strengths, to deliver exponential value for AHEL and its shareholders,” Reddy said.
Veda Corporate Advisors were the exclusive financial advisors for the transactions.
Shares of Apollo Hospitals Enterprise have risen 1.81% since the beginning of the year. The stock has gained over 30% in the last one year.