General Atlantic, Temasek in talks to buy stake in Aster DM Healthcare


Mumbai: US-based private equity firm General Atlantic Llc and Singapore’s sovereign fund Temasek Holdings Pte Ltd are in separate discussions to acquire a minority stake in Dubai-based Aster DM Healthcare, said two persons close to the development. The new investors will buy about 10-15% stake in DM, they said.

The company, which has been planning an initial public offering (IPO), will do a pre-IPO round of funding to allow existing investors to exit. As such, Olympus Capital Asia Investments Ltd and India Value Fund Advisors, which own equity in DM Healthcare will dilute part of their stake along with the promoters. Existing investors hold about 40% stake in DM Healthcare.

DM Healthcare, which operates a total of 15 hospitals, 80 clinics and 200 pharmacies in the Middle East and India, is planning to float an IPO at a valuation of $2.5 billion. As the IPO is not happening immediately, DM wants to allow investors to exit partially, said the first person. The IPO is expected by early next year, he said.

In 2012, Olympus had invested Rs.500 crore ($100 million) in DM Healthcare while IVFA invested Rs.175 crore in 2008.

A spokesperson at DM Healthcare did not respond to an email sent on Wednesday.

Spokespersons for General Atlantic and Temasek declined to comment. Mails sent to IVFA and Gaurav Malik, managing director, Olympus Capital on Wednesday went unanswered.

Aster DM Healthcare, which was founded by Azad Moopen in 1987, operates over 3,000 beds across hospitals in the UAE, India, Qatar, Saudi Arabia and Oman, among others. In India, it currently operates eight hospitals with 1840 beds. According to the company’s website, it has three more hospitals in the pipeline which will add 1,100 beds in India.

The healthcare sector, including hospitals and diagnostic clinics, has drawn strong interest from private equity funds. Temasek, in particular, has been an active investor.

It is an investor in Gurugram-based Medanta Medicity, the super-speciality hospital run by cardiac surgeon Naresh Trehan. It also holds a minority stake in Bengaluru-based cancer care hospital chain HealthCare Global Enterprises Ltd (HCG).

Temasek was also interested in acquiring Hyderabad-based chain CARE Hospitals. A consortium of TPG Capital and Temasek was among the final contenders for acquiring CARE Hospitals, which was eventually sold to Dubai-based private equity investor Abraaj Group in January.

In addition, Temasek Holdings is one among the private equity firms in discussions to acquire controlling stake in Kerala Institute of Medical Sciences (KIMS), a hospital chain with a presence in India and West Asia, in a deal worth $300 million, Mint reported in March. Similar to DM Healthcare, KIMS also runs multi-specialty hospitals in Bahrain, Oman, Dubai, Saudi Arabia and Qatar.

General Atlantic, which has invested about $2 billion in India since 2002, is also interested in healthcare assets. GA is currently in discussion with private equity investors to acquire their 69% stake in MedPlus Health Services Pvt. Ltd, the second-largest pharmacy retail chain in India, Mintreported in October last year.

Continued investor interest in the sector has allowed existing investors to exit profitably.

“The fact that several PE investments have seen successful exits in the sector, gives comfort to more and more investors to take a bet on the sector,” said Harish H.V., partner at Grant Thornton India LLP. “The shortage of quality healthcare services infrastructure coupled with rising demand, both domestic and through medical tourism, continues to keep the sector attractive for PE investors,” he said.

According to a January 2015 PricewaterhouseCoopers report, healthcare delivery system in India will require an investment of around $245 billion, to add 3.6 million beds, 3 million doctors and 6 million nurses over the next 20 years. India’s bed density is the lowest among Bric (Brazil, Russia, India and China) nations with just 1.3 hospital beds for 1,000 people, against the World Health Organization (WHO) guideline of 3.5 beds, the report said.

This opportunity has drawn in the investors.

In the last five years, private equity and venture capital investors have put in nearly $3.5 billion in the healthcare services sector, data from VCCEdge, the financial research platform of, shows.