Apollo Hospitals inks deal with KKR to raise Rs 550 crore

Apollo Hospitals today officially announced that it is raising around Rs 550 crore from US-based PE firm Kohlberg Kravis Roberts (KKR). The money will be used to repay promoters’ debt and build more hospitals.

“The partnership involves a Rs 550 crore long-term investment by KKR, together with its affiliates and select investors, in PCR, the holding company for the Apollo Hospitals Group,” according to company's statement.

The investment is in the form of a five-year callable security that consolidates existing debt at PCR and initiates a partnership in the healthcare sector across the two firms.

The PE fund will subscribe to the convertible debentures issued by Prathap Reddy’s holding company PCR Investments with an option to convert these debentures into equity shares of listed Apollo Hospitals at the end of five years. The promoters also will have the right to buy back these instruments at the end of two years.

Dr Pratap C Reddy, founder and chairman of the Apollo Hospitals Group said that this transaction is the culmination of very involved deliberations with the clear intent of working together to create long term value for the group and reflects our philosophy of partnering with players who have a long term view and deep understanding of the healthcare space.

Earlier Reddy told Business Standard that “we saw some takeaways from KKR as they have invested in Health Care America (HCA), one of the largest hospital chains in the US and also invested in Walgreen Drugs, which is part of Walmart and one of the largest pharmacy chain. This was an attraction”.

Sanjay Nayar, chief executive officer for KKR India in a statement commented that KKR has successful investments in the healthcare sector globally, including in market-leading businesses like Hospital Corporation of America and Alliance Boots.

“This partnership that has been initiated through our alternative credit business in India, and will look to pave the way for a much broader engagement between us as partners.”

Chennai-based Apollo Hospital in Chennai is one of the Asia's largest healthcare group with over 8,420 beds across 51 Hospitals, 1,503 Pharmacies, 92 primary care and diagnostic Clinics, 100 Telemedicine units across 10 countries.

The company is planning to invest around Rs 2,300 crore in the next three years to add 2800 beds.