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Aster and Blackstone-backed Quality Care to merge and create 10,150+ beds

Our Bureau, Bengaluru
Monday, December 2, 2024, 15:15 Hrs  [IST]

Aster DM Healthcare and Quality Care India Limited (QCIL or Quality Care), backed by Blackstone and TPG, one of the largest privately held hospital chains in India with a focus on emerging cities, have inked a definitive agreements for a merger. The merger has been approved by the board of directors of the respective companies and is subject to regulatory, corporate and shareholders’ approvals. The merged listed entity will be named Aster DM Quality Care Limited.
 
Aster DM Quality Care will have a combined portfolio of four leading brands: Aster DM, CARE Hospitals, KIMSHEALTH and Evercare. The combined entity will have a of network of 38 hospitals and 10,150+ beds spread across 27 cities making it one of the top 3 hospital chains in India.
 
Rationale for the merger is to create one of the top 3 hospital chains in India in terms of revenue & number of beds (38 hospitals & 10,150+ beds) with strong presence across South & Central India. There will be strong financial and operational metrics with superior margins and returns post transaction. The merged entity is positioned for substantial revenue growth, leveraging clinical depth to drive future success. There will be significant opportunities for both brownfield and Greenfield expansion with 3,500 new beds expected between FY24-27.
 
Dr Azad Moopen, founder and chairman of Aster DM Healthcare, said: “The new combined entity ‘Aster DM Quality Care’ is poised to become one of the largest healthcare players in the industry, setting new benchmarks in patient-centric care, innovation, and accessibility. The merger will also provide our medical professionals with an opportunity to cater to higher and diverse patient inflows.”
 
Amit Dixit, head of Asia for Blackstone Private Equity, said “We are committed to creating one of India’s leading platforms in the healthcare sector. We are excited to partner with the Moopen family which shares our values and strong governance standards. We believe Varun Khanna is a terrific leader and can help build the combined entity.”
 
Vishal Bali, senior advisor,  TPG, said: “Healthcare has long been a thematic focus for TPG globally and in India, and we are pleased to see Quality Care’s partnership with Aster to create one of India’s top 3 multi-specialty hospital chains. TPG has been a long-term investor in the hospitals segment in India, and is focused on building institutions of healthcare with a foundation of continuous quality improvement and standardized care to improve clinical outcomes and patient safety.”
 
Varun Khanna, group managing director, Quality Care, said: “This merger demonstrates our aligned cultures and value systems, and furthers our commitment to address bed shortage in India’s underserved regions.”
 
Aster is valued at a multiple of 36.6x on FY24 adjusted post IND AS EV/ EBITDA. In comparison, QCIL is valued at a multiple of 25.2x based on FY24 adjusted post IND AS EV/ EBITDA. Based on the swap ratio recommended in the valuation report, the resultant shareholding of the merged entity will be 24.0% and 30.7% held by Aster Promoters and Blackstone respectively, with the balance 45.3% being held by public and other shareholders.
 
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, was 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.

 

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