KKR invests in Indian hospital chain(2)

Kohlberg Kravis Roberts has invested in Indian hospitals chain Apollo Hospitals in a deal worth INR 5.5 billion (€65 million; $90 million), according to a statement from the target company. 

KKR will subscribe to convertible debentures issued by Apollo’s parent company PCR Investments. KKR has the option to convert the debentures into equity shares in Apollo Hospitals at the end of five years, with the founders holding the right to buy back these instruments after two years. 

“The investment is in the form of a 5-year callable security that consolidates existing debt at PCR and initiates a partnership in the healthcare sector across the two firms.”

The investment will be used to pay back the business’ existing debt, as well as to build new hospitals. 

“KKR has a history of successful investments in the healthcare sector globally, including in market-leading businesses like Hospital Corporation of America and Alliance Boots, and we are very excited with the opportunity to partner with [founder Pratap Reddy] and family who have created one of India's finest healthcare businesses,” head of KKR India, Sanjay Nayar, said in the statement.

The deal was not made from KKR’s latest private equity vehicle dedicated to Asia Pacific, according to a source close to the matter. 

KKR Asia Fund II closed on $6 billion earlier this year and has since made two investments: a $200 million acquisition of Weststar Aviation Services in Malaysia and a $1.6 billion buyout of Japan’s Panasonic Healthcare, Private Equity International reported earlier. 

It is unclear which fund the investment was made from, but it is likely to have come from an India debt-focused vehicle that was registered with the Securities and Exchange Board of India in August 2012. The firm declined to comment on fundraising, but media reports have since estimated the KKR India Alternative Credit Opportunities Fund I target at between $350 million and $1 billion.