Apollo Hospitals Enterprise's promoter pledging likely to hit 75%

Apollo Hospitals Enterprise (AHEL) might see its promoters' pledged shares going up for a short while to 75 per cent, from 68 per cent now. They are pledging shares for solvency funding at Apollo Munich Health Insurance, in which Apollo Hospitals Group is selling its entire 51.2 per cent to HDFC. 
 
Earlier, almost 74 per cent of the promoter shares were pledged to unwind a deal with private equity player KKR, raising concerns in the market.
 
According to the a filing with the exchanges, PCR Investments has pledged equity shares with Catalyst Trusteeship, acting on behalf of debenture holders, to the tune of 11.5 per cent of the total share capital of AHEL.
 
The pledge was made as security for the non-convertible debentures issued by PCRIL. PCR Investments is a public limited firm promoted by Apollo Hospitals Chairman Prathap C Reddy and his family.
 
Informed sources said the fresh pledging was for the solvency funding required in the insurance firm and HDFC is expected to refund it to the AHEL promoters, along with the stake acquisition. With the stake sale, the pledged shares are expected to come down to 35-40 per cent of the promoter shareholding in AHEL.
 
The company informed the exchanges that PCRIL had, as of end-March, held 19.62 per cent of shares in the company, while the total promoter shareholding was 34.4 per cent, of which 78.13 per cent is pledged. Last month, company officials said this had been brought down to around 68 per cent.
 
The promoters had earlier pledged the majority of their 34 per cent stake in the company, as part of the unwinding of the deal with KKR, which infused around Rs 550 crore in PCRIL in October 2013. The company said it was aiming to bring down the pledged shares to 35-40 per cent, with stake sale in Apollo Munich and others.
 
Of the 51.2 per cent stake Apollo Hospitals Group and a few employees are selling to HDFC, for Rs 1,347 crore, listed entity AHEL holds 9.96 per cent. This is expected to fetch around Rs 300 crore, subject to indemnity related adjustments.
 
With the deal expected to get complete in the near future, the promoter's pledged shares will come down to 35-40 per cent in the next three to four months, said a source.
 
The company had earlier said it was targeting to reduce its debt from over Rs 3,000 crore at present to Rs 2,500 crore by the end of this financial year.