Malaysia's IHH sells part of its stake in Apollo

MUMBAI: A cold war between the Prathap Reddy family, promoters of Apollo Hospitals and Malaysia's IHH Healthcare, its second largest shareholder with a 10.85% took a logical conclusion on Friday with the latter selling more than half of its stake in India’s largest hospital chain.

IHH put up 6% or 84.39 lakhs shares of Apollo Hospital for sale on Friday at a price between Rs 1267 to Rs 1320, according to a term sheet issued on Thursday night.

Nearly 1.3 crore shares of Apollo Hospital were traded on both the exchanges on Friday till 3 pm as against previous 10 days average of 1.22 lakh shares.

As per Thursday's closing price, the IHH 10.85% stake in Apollo is valued at about Rs 2000 crore ($335 million), nearly eight-fold rise from the $44.23 million it invested in 2005.

The 10 year old relation between Apollo Hospital promoters and IHH has taken a toll after the latter invested in several healthcare assets in India.

IHH has made two acquisitions in India last year—Continental Hospitals and Global Hospitals—for about Rs 1,600 crore. The first is a Hyderabad-based super specialty facility and the second is a chain of such hospitals. With footprints overlapping in multiple locations, the Reddys are irked at what they feel is a breach of trust.

The Reddys are said to have expressed their displeasure more than once, including communicating this to the IHH management soon after the Continental purchase in March last year. Apollo Hospitals chairman Prathap C Reddy himself reached out to Khazanah, the sovereign wealth fund of Malaysia and IHH's largest shareholder, but was assured that the M&A strategy was not meant to be competitive in nature.

IHH, which doesn't have a board seat in Apollo Hospitals, has a separate joint venture with the Reddy's in a profitable project in Kolkata, Apollo Gleneagles. IHH has a majority in this venture.