Apollo Hospitals commissioned Credit Suisse to find an investor for its pharmacy business.
Sources say the healthcare group is seeking an investment of more than $ 500 million for a 15-20% stake in Apollo HealthCo. The company was recently split into a subsidiary in order to attract a strategic investor.
Two senior sources confirmed that Credit Suisse had been given the task. While a Activity area spoke said Apollo was considering funding of $ 500 million, the other said the amount could be closer to $ 600 million. The second source also said that Apollo plans to sell a 15-20% stake in the company.
“The investment banker has been given the mandate to find an investor who understands the pharmaceutical industry. While due diligence has been initiated and investors are approached, termsheets have yet to be signed, ”the source said.
When contacted, Credit Suisse and Apollo Hospital made no comment.
Last week, Activity area had reported that SoftBank may be one of the investors interested in acquiring a stake in Apollo HealthCo. Although conversations between the two sides are at an early stage, the Japanese investor could push for a lower valuation.
Last month, Apollo Hospitals Enterprise Limited (AHEL) established a wholly owned subsidiary called Apollo HealthCo Ltd (AHL) into which it merged the back-end offline pharmacy business of AHEL (excluding pharmacies hospitals), the Apollo 24/7 digital healthcare platform, and the retail pharmacy business (Apollo Medicals Private Ltd), and the “Apollo 24/7” brand, the “Apollo Pharmacy” brand.
The company said the offline pharmacy business will continue to grow to 5,000 stores and maintain a revenue growth rate of 18-20% over the next three years. The Apollo 24/7 digital healthcare platform has demonstrated the ability to deliver drugs in two hours with over 10,000 PIN codes, coupled with the highest availability of drugs. Apollo 24/7 aims to reach 100 million registered users in five years.
Following the external fundraising at AHL, AHEL is expected to retain a controlling majority stake in AHL and a lower sales consideration of 1,210 crore will be received by AHEL. Sources said that HealthCo, with revenue of 6,000 crore, is growing 20% year-over-year and is expected to reach 12,000 crore over the next four years.