Apollo Hospitals mandates Credit Suisse to find investor for pharma business

Apollo Hospitals has appointed Credit Suisse to find an investor for its pharmacy business.

According to sources, the healthcare group is looking for an investment of over $500 million for a 15-20 per cent stake in Apollo HealthCo. The business was recently hived off as a subsidiary with a view to bring in a strategic investor.

Two highly placed sources confirmed that Credit Suisse has been given the assignment. While one

BusinessLine spoke to said that Apollo was looking at a $500 million funding, the other said that the amount could be closer to $600 million. The second source also said that Apollo is looking to sell a 15-20 per cent stake in the company.

“The investment banker has been given a mandate to find an investor who understands the pharma business. While the due diligence has been started, and investors are being approached, term sheets haven’t been signed yet,” the source said.

When contacted Credit Suisse and Apollo Hospital did not comment.

Last week, BusinessLine had reported that SoftBank could be one one of the investors interested in acquiring a stake in Apollo HealthCo. Though the conversations between the two sides are at a preliminary stage, the Japanese investor could push for a lower valuation.

Subsidiary formed

Last month, Apollo Hospitals Enterprise Limited (AHEL) had carved out a wholly-owned subsidiary called Apollo HealthCo Ltd (AHL) into which it had demerged AHEL’s back-end offline pharmacy business (excluding hospital-based pharmacies), digital healthcare platform Apollo 24/7, and retail pharmacy business (Apollo Medicals Private Ltd), and the “Apollo 24/7” brand, the “Apollo Pharmacy” brand.

The company said that the offline pharmacy business will continue to grow to 5,000 stores and maintain a revenue growth rate of 18-20 per cent in the next three years. The digital healthcare platform Apollo 24/7, has demonstrated the capability of delivering medicines in two hours in over 10,000 pin codes combined with the highest availability of medicines. Apollo 24/7 has the aspiration to achieve 100 million registered users in five years.

Post external capital raise at AHL, AHEL is expected to retain a dominant majority shareholding in AHL and a slump sale consideration of ₹1,210 crores will be received by AHEL. Sources said that HealthCo, with ₹6,000 crore revenue, is growing 20 per cent on a year-on-year basis and is likely to reach ₹12,000 crore in the next four years.