Amid rift, Malaysia’s IHH Healthcare sells 6% shares in Apollo Hospitals

MUMBAI: A cold war between the Prathap Reddy family, promoters of Apollo Hospitals and Malaysia’s IHH Healthcare, its second largest shareholder with a 10.85 per cent took a logical conclusion on Friday with the latter selling more than half of its stake in India’s largest hospital chain. Shares of Apollo Hospitals declined 5.3 per cent to Rs.1,246 on Friday.

IHH has sold 6 per cent or 84.39 lakhs shares of Apollo Hospitals on Friday through bulk deal for about Rs.1,070 crore. The shares were sold at Rs.1,268 apiece. DB International Asia, one of the buyers, bought 39.26 lakh shares, according to exchange data.

After this sale, IHH’s shareholdings in Apollo Hospitals has dropped to 4.78 per cent.

The deal will mark end of a decade old relation between the Reddy family and Asia’s biggest hospital chain, controlled by Malaysian sovereign fund Khazanah.

Amid rift, Malaysia's IHH Healthcare sells 6% shares in Apollo Hospitals

Relations between Apollo Hospitals promoters and IHH soured after the latter invested in several healthcare assets in India.

According to Thursday’s closing price, IHH’s 10.85 per cent in Apollo is valued at about Rs.2,000 crore ($335 million), almost eightfold rise from $44.23 million it invested in 2005.

“The Disposal is part of an ongoing and regular review of IHH Group’s investment portfolio by the Board to maximize return to its stakeholders. In addition, having acquired Ravindranath GE Medical Associates Private Limited (Global Hospitals) and Continental Hospitals Private Limited group in 2015, IHH Group is consolidating and rationalizing its investment to these operating companies in India as its 4th home market,” said IHH.

An email sent to Apollo Hospital did not elicit any response to till the time of going to press.

IHH has made two acquisitions in India between in the past 18 to 24 months —Continental Hospitals and Global Hospitals—for about Rs.1,600 crore. The first is a Hyderabad-based super specialty facility and the second is a chain of such hospitals. With footprints overlapping in multiple locations, the Reddys are irked at what they feel is a breach of trust.

“IHH has sold more than half and has planned to sell the remaining in a few months. They will explore an independent strategy in India,” said a source, close to IHH. The Reddy’s are said to have expressed their displeasure more than once, including communicating this to the IHH management soon after the Continental purchase in March last year.

Apollo Hospitals chairman Prathap C Reddy himself reached out to Khazanah, the sovereign wealth fund of Malaysia and IHH’s largest shareholder, but was assured that the M&A strategy was not meant to be competitive in nature.

IHH, which doesn’t have a board seat in Apollo Hospitals, has a separate joint venture with the Reddy’s in a profitable project in Kolkata, Apollo Gleneagles. IHH has a majority in this venture.