Speaking exclusively to CNBC-TV18's Shereen Bhan on the day the hospital turned 30, founder Prathap Reddy says that negotiations for the sale are on and could be concluded over the next few weeks.
KKR could pick up 7 percent in PCR investments which would be equivalent to 3-4 percent stake in Apollo Hospitals.
Reddy also said that the company was on track to touch 2,000 pharmacies over the next few months. It could also take a call on divesting the pharmacy business or bringing a strategic partner on board after 6-7 months.
Apollo hospitals has outlined a capex plan of Rs 2500 crore. Out of those, Rs 600 crore has already been spent and doesn't take into account the sharp depreciation of the rupee.
Reddy is confident of adding 900 beds in the next few months and the total bed strength could touch 3,500 by 2015.
India's largest hospital chain is also looking at stepping on its international expansion over the next 2-3 years. It is in talks with 2-3 countries to start day care clinics and hospitals with Tanzania being the first destination.
Below is an excerpt of his interview to CNBC-TV18.
Q: Please comment on whether you are in talks with private equity giant KKR to sell a stake in Apollo Hospitals or your holding company. There has been a lot of speculation.
A: We are talking to KKR. I am sure you know that KKR wants a major part of HCA. We met Mr. Travis. We were really pleased with his views and we thought it is very nice to be associated with them. I am not giving any of the Apollo equity. We are only giving our PCR Investments' portion.
We are talking to them and whatever has happened in the last one month, there has been some delay. We have not finalised anything, but all that I can assure is we are talking and it is going well. Hopefully, when all is well, we will announce to you.
Q: So there are no plans to offload any stake in Apollo Hospitals if at all a deal fructifies will KKR. KKR will pick up an investment in the holding company which is PCR Investments. How much stake are you looking to offload in the holding company?
A: It will be equivalent to about 3-4 percent of Apollo which should work out around seven percent of PCR. PCR also holds other investments; so it is probably around that level. It is equivalent to approximately around USD 100 million.
We are still talking, nothing is final yet. There is a good wavelength because KKR wants HCA- the world's largest healthcare system in US. Since we are probably one of the largest in this part of the world, it is nice to have association with the person who has a large interest there.
Q: By when do you hope to finalise the negotiations with KKR?
A: I do not know. We thought they were a little busy and we were busy. Maybe, in the next few weeks; it should not be too long. If it happens, it should happen in the last few weeks.
Q: Any plans for the pharmacy business going forward? You were looking to possibly hive that off? Have those plans been shelved altogether?
A: We have not shelved at all. Somehow or the other, we have never been serious on hiving pharmacy division. What we thought was pharmacy first it should reach what they think is a critical level 2000 pharmacies. It hopefully will reach in the next six months. At that time, they will probably think.
However they should go with someone not in private equity investor, but someone who has got a similar business.
We have no idea at this point, but we are positive. I spoke to Shobana Kamineni, she said we are very clear that our next target is to hit 2000 pharmacies. We are marching there with all our efforts and also creating little change in the models to suit the present time because people now are talking more about wellness. So, we are adding little more portion of wellness into the new pharmacies.
Q: When you touch the 2000 pharmacy stores, you will look at bringing on board either a strategic partner or possibly hiving-off this business? Those plans are very much on the cards, but you will not like to sell it off or bring on board private equity investor?
A: We want to go ahead and complete these 2000 pharmacies. At this time we have no plans of hiving out or associating with anybody at this time, perhaps after six-seven months. If there is something good in these partnerships, the board will consider it but in the last meeting Shobana very categorically said that we have no plans at this time to do.
Our next objective is to fine-tune all our stores and then reach that 2000 pharmacy number. Two thousand is not a magic number but the software they have at the moment so it is nice to reach that number which will be taking us to a few more places where we are not there now.
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