Advent International to Invest $300 Million in Apollo HealthCo

Private equity firm Advent International has agreed to invest ₹2,475 crore ($300 million) in Apollo HealthCo, a wholly owned subsidiary of Apollo Hospitals Enterprise Ltd. This deal coincides with the merger of Keimed Pvt Ltd, a wholesale distribution company owned by the promoters of the Apollo group, into Apollo HealthCo.

Apollo HealthCo operates in two sectors: digital healthcare (Apollo 24/7) and pharma distribution. The pharma distribution arm currently serves around 6,000 pharmacy outlets owned by Apollo Pharma Ltd, another Apollo group company. With Keimed's merger, this distribution network will expand to serve approximately 70,000 outlets.

Advent International's investment in Apollo HealthCo will be in the form of compulsorily convertible debentures. The investment will be divided into two tranches: ₹1,732 crore (70%) at first close, and ₹743 crore (30%) in 12 months. Upon conversion into equity, Advent International will secure a 12.1% stake in Apollo HealthCo. The investment values Apollo HealthCo at ₹22,481 crore.

The funds from Advent International's investment will be allocated as follows: ₹860 crore for Apollo HealthCo's expansion, ₹890 crore to Apollo Hospitals Enterprise Ltd (to partially repay the transfer of the parent company's pharma distribution business to Apollo HealthCo, which had cost ₹1,290 crore), and ₹725 crore to acquire an 11.1% stake in Keimed, facilitating the merger. The remaining ₹400 crore from the original transfer will convert into equity shares in Apollo HealthCo.

After the merger, the new ownership structure of Apollo HealthCo will be as follows: Apollo Hospitals Enterprise Ltd will hold 59.2% of the shares, existing shareholders of Keimed will have 25.7%, Advent International will hold 12.1%, and 3% will be allocated to employee stock ownership plans (ESOPs). This significant restructuring aims to strengthen Apollo HealthCo's position in both digital healthcare and pharma distribution, setting the stage for further growth in the healthcare industry.

HBL