The deal values Aster DM, founded by entrepreneur Azad Moopen in 1987, at Rs 7,200 crore. Post the investment, stake of IVFA and Olympus Capital will increase from 37% to 42% in the company.
"Olympus believes that DM Healthcare is building a regional industry leading franchise and is already among the top three healthcare services firms in India in terms of size. The company will further strengthen its position post IPO," said Daniel Mintz, the founding MD of Olympus Capital.
According to a person with direct knowledge of the transaction, the deal attracted interest from several major private equity players. Veda Corporate Advisors was the banker to Aster DM Healthcare for the deal.
The company, which focuses on the Middle East and Indian market, has revenues of over Rs 3000 crore for FY14 with an EBITDA margin of 18%. Revenue (the majority of which comes from the Middle East) is expected to touch Rs 4000 crore in FY15. The company plans to set up three greenfield hospitals in South India.
The healthcare chain has been pursuing an inorganic growth strategy to expand its network across Asia. Aster DM Healthcare acquired Philippines based Clinica Manila and Jordan's Orange Pharmacy earlier this year.
This is the third major round of funding for the hospital chain, which raised Rs 175 crore from IVFA in 2008 followed by a Rs 500 crore round in 2012 led by Olympus Capital. "We had partnered with Dr Azad Moopen in 2008 through equity investment of $40 mn in Aster DM Healthcare.Since then, Dr Moopen and his team have built a world-class business which has grown ten times. We have had a great relationship with the team and are happy to continue supporting them through further investment," said Sunil Theckath, Partner, India Value fund Advisors.
Aster DM is planning an IPO, and has started shortlisting investment bankers for the process. While it had initially considered listing in London, it is likely to tap the Indian markets to raise anywhere between $150-250 million.
Private equity funds have showed increasing interest in the Indian healthcare sector, including super specialty clinics and larger multi-specialty hospitals. Venture capital and private equity investment in healthcare reached its highest level since 2006 last year with $780 million (Rs 4,680 crore) across 49 deals followed by another record year in 2012 with $771 million (Rs 4,626 crore) invested across 33 deals, according to data from Ernst & Young.
In one of the largest recent deals, buyout major Carlyle Group picked up 27% stake in Gurgaon-based multi-specialty Medanta Medicity Hospital for Rs 960 crore, valuing the company at Rs 3,550 crore. In another deal, a consortium from Quadria Capital bought a majority stake in hospital chain Medica Synergie.