KKR and Co invests Rs550 crore in Apollo Hospital's holding company

US private equity firm KKR and Co has invested Rs550 crore in PCR Investments Ltd, the holding company of India's largest hospital chain Apollo Hospitals Enterprise Ltd.

The investment will see PCR Investment Ltd, Dr Prathap Reddy and family'-owned holding company of Apollo Hospitals, reduce its debt from Rs700 crore to Rs150 crore.

The New York-based PE fund will buy convertible debentures of PCR Investments, with an option to convert the investment into equity shares of Apollo Hospitals at the end of five years, and PCR Investments can buy back the debentures at the end of two years.

KKR may own nearly 5 per cent in Apollo Hospitals if it converts the debentures to equity shares.

Currently, the founder's family holds a 34-per cent stake in Chennai-based Apollo Hospitals, of which 18.42 per cent is held through PCR Investments.

''KKR has successful investments in the healthcare sector globally, including in Hospital Corporation of India and pharmacy chain Alliance Boots. This partnership has been initiated through our alternative credit business in India, and will look to pave the way for a broader engagement between us as partners,'' said, Sanjay Nayar, CEO of KKR India.

"This transaction is the culmination of involved deliberations with the clear intent of working together to create long term value for the group and reflects our philosophy of partnering with players who have a long term view and deep understanding of the healthcare space," Dr. Reddy said.

Apollo Hospitals will use the investment to reduce debt and build more hospitals.

In 2010, Dr.Reddy had said that Apollo Hospitals plans to invest Rs3,000 crore for its expansion plans by 2014, with the objective of adding 4,000 beds.

Apollo is also planning to set up hospitals in smaller cities and towns over the next three to five years.

Founded in 1983 by Dr. Reddy, Apollo Hospitals is one of Asia's largest healthcare groups with over 8,500 beds across 50 hospitals, and a significant presence at every point of the medical value chain.

Started as a 150-bed hospital, the group has grown both in India and overseas, with hospitals in Sri Lanka, Bangladesh, Ghana, Nigeria, Republic of Mauritius, Qatar, Oman and Kuwait.

It is also the largest telemedicine provider in India with 71 centres.