Apollo HealthCo Demerger And Listing To Help Hospital Biz Secure Investments
Apollo Hospitals aims at adding around 3,650 operating beds over the next five years and this requires a total investment of Rs 8,300 crore
Chennai: Apollo HealthCo, the pharma distribution and digital health arm of Apollo group, is expected to get automatically listed on the bourses by January 2027, following which the stake of Apollo Healthcare Enterprises and promoters will come down from 59 per cent to 36 per cent. The demerger of the distribution business will also help the group secure investments for its hospital business.
The approvals for the automatic listing of Apollo HealthCo is underway and the process is expected to be completed by January 2027. In the listed entity, Apollo Healthcare Enterprises and the promoters will hold 36 per cent stake and the remaining 23 per cent will be made public. Existing investors of Apollo Healthcare Enterprises will get 1.9 per cent share in Apollo HealthCo, Advent International will hold 11 percent and Keimed investors will hold over 20 per cent stake.
HCL shares are expected to be listed at an estimated price of around Rs 650 per share.
“Investors who wished to put money into the healthcare business have been finding the losses in Apollo HealthCo unattractive. With the demerger of pharma distribution and health tech businesses, they will find the healthcare business more attractive,” said a highly placed source in the group.
Apollo Hospitals aims at adding around 3,650 operating beds over the next five years and this requires a total investment of Rs 8,300 crore.
The pharmacy division was hived off from the flagship company years back due to the FDI norms in multi-brand retail. The healthcare company had received investments from Foreign Institutional Investors and pharmacy retail could not be a part of it. The pharmacy division now has over 7000 stores. During the pandemic, the health tech platform grew fast. Subsequently, Apollo HealthCo, which housed both these businesses, had been incurring around Rs 600 crore losses.
Further, Keimed, the pharmaceutical distribution entity to Apollo’s hospital network also has been growing in the past years. Keimed was founded at a time when the pharmaceutical manufacturers did not sell drugs directly to the hospitals. Keimed started distributing products to other hospitals and stores as well later on and brought down its revenue dependency on Apollo Hospitals from 90 per cent to 60 per cent. It also received investment from Mitsui from Japan, and acquired stakes in several pharmaceutical distribution companies across India.
These entities have been merged into Apollo HealthCo and the new entity has revenues upwards Rs 16,000 crore. HealthCo will demerge all the distribution and tech business of Apollo Group and this will help secure private equity investments for the healthcare business.
It will also help Apollo Group create India’s leading integrated pharmacy distribution business complemented by fast growing omni-channel digital health business.
