Aster DM Healthcare (Aster), one of the largest and fastest-growing integrated healthcare providers in GCC and India, has received board approvals from its subsidiary Affinity Holdings Private Limited (Affinity) and approval from its Board of Directors to separate the India and GCC businesses into two distinct and standalone entities.

Under the separation plan, Affinity has entered into a definitive agreement with a consortium of investors led by Fajr Capital, a sovereign-owned private equity firm headquartered in the UAE, to invest in Aster's GCC business.

The Fajr Capital - led consortium also includes Emirates Investment Authority, Al Dhow Holding Company (the investment arm of AlSayer Group), Hana Investment Company (a subsidiary of Olayan Financing Company) and Wafra International Investment Company. The board of Affinity and its representatives who negotiated the transaction formed a positive view of the favourable valuation and other terms offered by the Fajr Capital-led consortium.

In India, Aster has a substantial and growing network in 5 South Indian states through its 19 hospitals, 13 clinics, 226 pharmacies and 251 patient experience centres. Meanwhile, in the Gulf, Aster has developed a strong reputation and presence, with 15 hospitals, 118 clinics and 276 pharmacies across the UAE, Saudi Arabia, Qatar, Oman, Bahrain and Jordan.

Upon completion, the separation of the India and GCC businesses will establish two distinct regional healthcare champions that will benefit from the strategic and financial flexibility to focus on growing market demand and the priorities of patients.

Both the India and GCC entities will be operated by separate dedicated management teams and will also benefit from a dedicated investor base that will aid future growth in the Indian and GCC markets respectively, both of which hold significant growth potential.

Post completion, Dr. Azad Moopen will continue as the Founder & Chairman of Aster overseeing both India and GCC entities. Ms. Alisha Moopen will be promoted to Managing Director and Group CEO of the GCC business to lead a long-term strategy that will unlock value as a pure-play GCC operating company. The Indian entity will continue to be led by Dr. Nitish Shetty as Chief Executive Officer, who will focus on the growth of the India business, aimed at creating value for its shareholders.

EY and PwC provided independent valuation advice and ICICI Securities provided fairness opinion for the valuation guidance. Baker & McKenzie LLP was Affinity's lawyers on the transaction. Cyril Amarchand Mangaldas was Aster's lawyer on the transaction. AZB & Partners were the advisors to independent directors. Moelis & Company and Credit Suisse acted as the sell-side advisors. HSBC Bank Middle East Ltd., Allen & Overy LLP and PwC acted on behalf of the Fajr Capital consortium.

Dr. Azad Moopen, Founder and Chairman of Aster DM Healthcare said: "The strategic decision to segregate the India and GCC operations was based on the rationale to establish fair value for both entities, creating two pure-play geographically focused entities that are able to leverage the growth opportunities in their respective markets. In India, we as Promoters, remain committed to our growth plans and hence had increased our stake to 42% earlier this year. Major institutional shareholders continue to remain invested, reflecting overall confidence in the Company's India business model and go-to-market strategy spanning all segments of the healthcare space."

"For the GCC, Fajr Capital has been selected by the board of Affinity as our trusted private equity partner to lead a consortium of investors to invest in the GCC business. We are confident given their demonstrated expertise and are excited by their commitment to empowering our expansion plans within the GCC's dynamic healthcare landscape, especially in Saudi Arabia. The Moopen family will retain 35% stake in the GCC Business. Together, we envision a future where Aster's business in the GCC continues to deliver best-in-class healthcare services to its patients across the region, underpinned by Fajr Capital's strong market presence and network. Alisha will lead on these ambitions and oversee the next phase of our growth trajectory in the GCC."

Alisha Moopen, who will serve as the Managing Director and Group CEO of Aster's GCC business, said: "While the India business of Aster DM Healthcare has made steady progress in growing multifold within a short period of time, the segregation will enable our GCC operations to seize a significant opportunity to unlock value through its geographic expansion, diversify revenue through targeting different economic segments, while expanding into tertiary care and digital health. In our journey with the GCC business, we are glad to be joined by Fajr Capital who are renowned for their expertise in facilitating business growth. With our upcoming expansions in the KSA market, we are confident that their strategic counsel would be of utmost value."

The separation will also offer Aster India an opportunity to potentially expand its institutional investor base to include investors who are mandated to invest in India only or majority businesses. Shareholders of the India business will benefit from better reporting of operating and financial parameters for the listed entity.

The transaction is subject to shareholder approval in India, regulatory compliances and other customary conditions to closing. The Company expects the transaction to close by March 2024.