'Expanding into new geographies represents the largest opportunity for us...' says Alisha Moopen, who will be Managing Director of the GCC operations under new deal. Image Credit: Supplied

Dubai: There will be no diminishing of size, workforce – and ambitions – for UAE’s Aster DM Healthcare even with a new ownership structure coming into being, according to Alisha Moopen, who was confirmed as Managing Director for the GCC operations as part of the shakeup.

Aster DM will also continue to attract ‘better talent’ as part of its next phase of growth, she added. The operator’s current workforce in the Gulf more than 12,000.

On Tuesday (November 28), Aster confirmed it was splitting its UAE-Gulf and India operations, with a consortium – led by Fajr Capital – taking 65 per cent in the former.

Among the biggest hospital and clinic operators in the UAE, Aster DM will seek ways to make its presence felt in Saudi Arabia and build on its already established presence in Oman and Qatar. “Obviously, we have our biggest presence in Dubai and Sharjah, where we will want to maintain our leadership positions,” said Alisha, daughter of Dr. Azad Moopen, the founder and who remains Chairman of the entity.

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“But expanding into new geographies represents the largest opportunity for us under the new structure. It will play to our strengths.” (In Saudi Arabia, Aster currently has a 218-bed hospital in Riyadh.)

This is where the new investors who have come on board will help, representing some of the biggest funds from the Gulf, including Emirates Investment Authority, Hana Investment Company (a subsidiary of Al Olayan Financing) and Wafra International Investment Company.

“The focus is on expansion where possible – and not on diminishing the Aster network presence in any way,” said Alisha. “If the odd clinic or pharmacy were to shut, that’s part of routine business decisions, not brought on by the stake sale.”

A possible IPO?

At some point, Aster DM’s Gulf operations could be a suitable candidate for an IPO. (The UAE and Saudi healthcare sector is seeing a lot of action on the stock market, with Pure Health in Abu Dhabi confirming one and Amanat expected to do so with its own healthcare venture.)

If Aster DM has such a plan, Alisha is not letting on. “The new investors have come on board with long-term plans,” she said. “As for us, it will be business as usual operationally.”

In a statement, Iqbal Khan, CEO of Fajr Capital, said: “The Moopen family has built a world-class company, with a rich legacy of delivering high quality healthcare to millions of patients.

“Large family-led platform businesses is an area where we have deep experience and we believe that Aster has significant potential to meet the growing demand for integrated healthcare services across the Gulf.

“We are grateful to the Moopen family for their trust and look forward to working with them, our consortium partners and the management team to accelerate Aster’s ambitions through continued investment, innovation and expansion.”

Mapping next round in India

Leading up to the deal and splitting the company, Aster DM’s founders – the Moopens - had been raising their shareholding in the India operations. It now stands at 42 per cent, from 37.5 per cent from a ‘few months ago’.

One of the prime motivating factors behind the stake sale and creating separate entities was to realise the full potential of the India operations. The new funds will help with that, which is to raise Aster’s hospital bed capacity by another 1,500 in 3 years. “That should add up to 6,000 beds, which is quite a sizeable number for what we hope to achieve in India,” said Alisha.

Eyeing a strategic investor

The changes on the India side could also be the harbinger to rope in a ‘strategic investor’, most likely a global name in the healthcare business. 

A statement issued by Aster DM hints as much - "Shareholders of the India business will benefit from better reporting of operating and financial parameters for the listed entity. The separation (from the GCC operations) 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."

That's the bigger picture Aster - and Alisha - is looking to put together. With $1 billion in funds to call on, it should be easy enough...

What the deal means for Aster DM stock
Aster DM Healthcare's sale, valued at $1.01 billion, involves the separation of operations in the Gulf from those in India. In this strategic move, Fajr Capital Advisors, a sovereign-backed private equity firm, will acquire 65% in the newly formed Alpha GCC Holdings Ltd, while the Moopen family will retain 35%.
The division of GCC and India operations may result in a temporary reduction in overall earning. In the long term, the majority stake sale will allow the company to optimize pricing strategies and improve profit margins, contributing to overall financial health.

It is important to note that the success of the acquisition will depend on the company's ability to optimize pricing and improve profit margins.

- Vijay Valecha, Chief Investment Officer at Century Financial