(Nov 29): Quality Care India Ltd, the Indian hospital chain backed by Blackstone Inc, agreed to combine with Aster DM Healthcare Ltd in an all-stock deal that will create one of India’s largest hospital chains.

Blackstone will be the biggest shareholder of the newly-combined entity with a roughly 31% stake, while Aster founders will hold 24%, according to a regulatory filing on Friday, which confirmed an earlier Bloomberg News report. The company will remain listed in Mumbai and be rebranded as Aster DM Quality Care Ltd.

The world’s largest alternative asset manager plans to continue to invest through the combined entity, which is set to be valued at US$5 billion (RM22.2 billion) including debt, according to Ganesh Mani, a Mumbai-based senior managing director at Blackstone’s private equity group.

“We have come from nowhere to create the second-biggest player in India in less than two years through a transformative buy-and-build strategy,” Mani said in an interview.

Aster DM Quality Care will have more than 10,000 beds, making it one of India’s top hospital chains in terms of revenue and bed capacity. The deal would help the new company improve its profitability, growth potential and cost savings. Based on the agreed swap ratio, Aster shareholders will together own 57.3% of the combined entity, while Quality Care investors will hold 42.7%.

Dealmaking activity in India has ballooned this year amid increasing interest from global investors seeking to tap the country’s growth potential. The volume of deals involving Indian companies has reached US$94 billion this year, a 16% increase from a year earlier, according to data compiled by Bloomberg. The Aster-Quality Care deal is poised to be one of the largest healthcare deals in India in 2024.

“Healthcare and life sciences are key sectors for Blackstone both in Asia and globally,” Mani said. “We see a huge opportunity to grow in India, and expand the new platform both organically, by using our scale and expertise, as well as via acquisitions.”

Blackstone was among several private equity firms and pension funds that have been considering a potential deal for Aster, people with knowledge of the matter said last year. The Economic Times reported in September that Blackstone-backed Quality Care and Aster were in advanced talks on a merger.

Founded in 1987 by chairman Azad Moopen from a single clinic in Dubai, Aster has since expanded in the Gulf region and India, operating dozens of hospitals as well as hundreds of clinics and pharmacies. Earlier this year, the company separated its business in the Gulf from the India business. 

Aster’s shares climbed 2.3% on Friday, the sixth straight day of gains, to hit the highest level in more than seven months. The Bengaluru-based company has a market value of almost US$3 billion.

Moelis & Co and Advay Capital Advisors Pvt were financial advisers to Aster, while Kotak Mahindra Bank Ltd served as corporate adviser. Quality Care’s private equity owners worked with NovaaOne Capital Pvt on the deal.

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