Apax in talks to sell stake in India's Apollo Hospitals: sources

MUMBAI Fri Sep 28, 2012 4:10am EDT

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MUMBAI (Reuters) - Global private equity firm Apax Partners LLP is looking to sell its 10 percent stake in Indian hospital chain Apollo Hospitals Enterprise Ltd, three sources with direct knowledge of the talks said, in a deal that could raise around $250 million or more.

Malaysian sovereign fund Khazanah Nasional Bhd KHAZA.UL, which already holds a 10.85 percent stake in Apollo Hospitals (APLH.NS), is one of the funds in talks with Apax, said the sources, who declined to be named as they were not authorized to speak to the media.

Apax, which invested in India's largest hospital chain in September 2007, has yet to start a formal process but has also had early talks with other investors, including the Blackstone Group LP (BX.N) and Bain Capital, the sources said.

Apax's holding in Apollo Hospitals is valued at about $190 million at Thursday's closing share price of 731.90 rupees.

"The transaction would be at least a 30 percent premium to the current market valuations," said one of the sources.

A rally in Indian shares this year is raising the prospect of exits by funds, after a stock market boom between 2006 and 2008 that KPMG estimates attracted $31.5 billion in private equity investments.

Apollo Hospitals shares had gained 29.5 percent so far this year as of Thursday, outperforming a 22.2 percent gain in the main NSE index .NSEI, on improving profits and expectations for increased spending on health care in India.

Shares in the hospital chain, which has 50 owned or managed hospitals with a total capacity of more than 8,250 beds, have tripled since Apax purchased its stake.

Apax and Khazanah officials were not immediately available to comment. Blackstone and Bain declined to comment.

"They (Apax) had indicated about it (sale plans) but they have not initiated the process. They are happy with the company's performance," Sangita Reddy, executive director of operations at Apollo Hospitals, told Reuters.

(Additional reporting by Manoj Dharra in Mumbai and Yantoultra Ngui in Kuala Lumpur; Editing by Rafael Nam and Edmund Klamann)

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