IFC to invest $60 mn in Apollo Hospitals

Apollo Hospitals Enterprises Limited (AHEL) is planning to raise $60 million from the International Finance Corporation (IFC). The fund raising is aimed to partially fund the hospital chain’s investment plan of $394 million.

Besides, Apollo is planning to enter Tanzania, Zambia and Rwanda, countries with middle and lower income, through an asset-light model.IFC’s expertise and industry relationships in such countries would bring value addition that is unavailable from other investors, according to IFC. It also plans to enter business segments, such as medical education.

The 1979-founded AHEL is one of the largest integrated private healthcare groups in the country, with 5,888 beds. The proposed investment of $394 million, over the next four years, targets to add about 2,900 beds to the network and for equipment purchases for the existing hospitals and to expand the chain’s network of “Reach” hospitals, which focus on smaller and simpler facilities in less developed population centres.

IFC’s investment comprises A/B Loans of up to $60 million, according to the international corporation based in America. The proposed IFC investment is a corporate-level loan, and will be deployed at several locations of the company in India. Washington-headquartered IFC holds around 0.9 per cent of AHEL’s shares.

The hospital chain has planned expansion in cities including Mumbai, Bangalore, Patna, Vishakhapatnam, Nashik, Nellore and Trichy, besides in its headquarter city of Chennai.

Apollo’s facilities in larger cities will act as centers of excellence for tertiary healthcare, while its new facilities in tier-II and tier-III cities and in low-income states will bring affordable quality healthcare closer to populations in these locations. It will also reduce the need for people to travel long distances to seek medical care, said in the project document. The project, upon completion, will provide additional direct employment to 9,000 people in the healthcare sector, apart from generating indirect employment.

Besides, IFC and AHEL have a strategic relationship. As the Apollo Group enters new business segments, such as medical education, the company can leverage IFC’s expertise in these markets and sectors. Apollo founder Prathap C Reddy owns 33.1 per cent in the chain along with his family members. Other significant shareholders are Apax Group (12.7 per cent) and Integrated Healthcare Holdings (Mauritius) Ltd (11.2 per cent).