The promoters of Apollo Hospitals are planning to cut the level of pledged shares by at least 50 per cent in the next six months. The promoters have around 34.40 per cent stake in Apollo Hospitals Enterprise Ltd (AHEL). And, almost 74 per cent of that stake was pledged till the end of December 2018. Between December and January, there has been a 5 per cent increase in pledges.
Addressing investors on Monday, Suneeta Reddy, managing director, AHEL, said that 5 per cent shares were pledged because of unwinding of the KKR instrument, which was a back ended structure. The company had used the pledged share funds to infuse money into the joint venture Apollo Munich Health Insurance Company to meet the solvency ratio and both the partners had to invest into it.
"I would like to mention that we do have plans to reduce the pledges significantly, by at least 50 per cent in the next six months. The 5 per cent increase happened because we had an instrument with KKR and in January we had to unwind that instrument. We have planned two liquidity events. We believe that they will happen in the next six months," she told analysts today, adding that it could even happen in the next quarter.
The US-based KKR had infused Rs 550 crore in AHEL's holding company PCR Investments in October 2013, which was expected to be used to repay promoters' debt and build more hospitals. Following the unwinding of the instrument, Sanjay Nayar, member and CEO of KKR India, who has been an independent director of the company since 2014, has resigned from the board with effect from February 9, 2019. KKR has, of late, increased its stake in Max Hospitals.
Share prices of AHEL on Monday came down from Rs 1,290 per share at the open of the market to Rs 1,124.95 per share at the close of the day. The share prices fell to a low of Rs 1,092 per share during the day, according to BSE.
The company has several assets under its fold including a 51 per cent shareholding in Apollo Munich Health Insurance. The company also has another liquidity opportunity which it will consider, Reddy said, without revealing the details of the second asset.
Meanwhile, AHEL is expected to buy the shares of IHH Healthcare from its 50:50 JV hospital in Kolkata, Gleneagles Hospital and is awaiting talks to be held on the share pricing and legal matters. It may be noted that IHH, which was also an investor into AHEL, has later exited and started plans to acquire majority stake in its rival Fortis Healthcare.