Mumbai: Eyeing inorganic growth, debt reduction and investment in building digital capabilities, India’s largest private hospital chain Apollo Hospitals Enterprise Ltd on Monday launched a so-called qualified institutional placement (QIP) offering, to raise as much as Rs1,000 crore by selling shares to institutional investors.
A QIP is a fundraising route used by listed companies to raise funds by selling equity and equity linked instruments to only institutional investors.
The hospital chain’s board has fixed a floor price of Rs2,508.58 apiece for the share sale, based on the Securities and Exchange Board of India’s pricing formula for such transactions. Companies are allowed to offer up to 5% discount on the floor price to prospective investors.
According to the terms of the deal, seen by Mint, the company is looking to offer its shares in a price range of Rs2,457 to Rs2,511 per share, a discount of 3.77% – 5.84% to the closing price of Rs2,609.25 on the NSE on Monday.
Investment banks Bank of America, Axis Capital, JP Morgan and Kotak Mahindra Capital are advising the company on the share sale.
Apollo Hospitals will use the funds raised to acquire a 50% stake in a joint venture, seek inorganic growth opportunities, as well as look to pare down debt from its balance sheet.
“Our company proposes to utilize the net proceeds for: financing, in part, acquisition of the 50% equity stake held by Gleneagles Development Pte. Ltd. (GDPL) in Apollo Gleneagles Hospital Limited (AGHL), pursuant to the share purchase agreement dated November 11, 2020 executed among our company, GDPL and AGHL for an aggregate purchase consideration of Rs410 crore,” said an offer document filed by the company with the stock exchanges.
Funds will also be used to invest in technological and digital initiatives, including enabling the development of Apollo Hospital’s digital platform Apollo 24/7 into a comprehensive, integrated healthcare system and/or strengthening our other digital platforms for an amount not exceeding Rs1,50 crore, the offer document said.
As of 30 November, Apollo Hospitals bed capacity stood at 10,209 beds in 71 hospitals located across India and overseas.
For the six months ending 30 September, Apollos Hospitals reported revenue from operations at Rs4,932.2 crore, a drop of almost 9% from the revenue of Rs5,412.6 crore reported in the same period in 2019, reflecting the impact of the covid-19 pandemic. The hospital chain’s bottom line was impacted more severely, with the company reporting a loss of Rs167.4 crore in the six months ending 30 September, as compared to a profit of Rs132.3 crore in the same period in 2019.