Apollo Hospitals scouting for acquisitions in north and east India

The hospital chain recently got its board's approval to raise up to Rs 1,500 crore and a portion of it will be used for acquisitions

After acquiring IHH Healthcare (IHH’s) stake in Apollo Gleneagles Hospitals, Kolkata (AGHL), Chennai-based Apollo Hospitals is now scouting for some more acquisitions in north and east India. The hospital chain recently got its board’s approval to raise up to Rs 1,500 crore and a part of it would be funded for acquisitions.

According to Suneeta Reddy, managing director, Apollo Hospitals Group, they may not look for greenfield projects now, but they are looking at a few small-ticket acquisitions (like 300 beds in larger cities and 200 beds in smaller ones) to expand its presence mainly in the north and eastern parts of the country. 

Recently, Apollo signed a definitive share purchase agreement with IHH, its JV partner in Apollo Gleneagles Hospitals, Kolkata, to acquire its existing 50 per cent stake in AGHL for a cash purchase consideration of Rs 410 crore.

She said the proposed qualified institutional placement (QIP) would fund acquisitions for investment in 24/7 app and to reduce debt to enhance profitability. Apollo got its board’s approval to raise up to Rs 1,500 crore on preferential basis or through QIP. 

Krishnan Akhileswaran, group chief financial officer, Apollo Hospitals, said occupancy in November increased to 70 per cent from 65 per cent in October. It was 38 per cent in the first quarter. He said the break-even is around 50 per cent. The Covid-19 occupancy is 30 per cent of the total occupancy.

On pharmacy, he said 80 per cent Ebitda would be captured by back-end operations of Apollo Hospitals, and once the initial costs are absorbed the back-end operations can capture 85 per cent of the Ebitda of its pharmacy business.