Apollo founders may sell stake in Munich Re JV

CHENNAI : Prathap C Reddy and his family, founders of India’s Apollo Hospitals Enterprise Ltd, plan to sell their holdings in an insurance venture with Munich Re AG to repay debt, people with knowledge of the matter said.

The family is seeking to sell its entire holding of 41% in Apollo Munich Health Insurance Co., for about $170 million in six months, the people said asking not to be identified as the discussions are private. The proceeds will be used to repay part of the debt raised by pledging Apollo Hospital’s equity as collateral, the people said.

Investors have been concerned about leveraged companies including Subhash Chandra’s Essel Group and Anil Ambani-controlled firms that have borrowed by offering shares as collateral leaving them vulnerable to margin calls as stocks plummet. Shares of Apollo plunged the most in seven years on Monday after the founders pledged more shares to raise funds to repay debt. “We are aware of the recent increase in our pledge levels,” Apollo’s managing director Suneeta Reddy said in a text message when asked about the asset sale plan. “We have clear plans to reduce the same by at least 50% over the next six months.” She didn’t comment about the plan to sell stake in the insurance venture.

More than three-fourth of about 34% stake that the Reddy family holds in the hospital operator is kept as collateral for loans, the people said. Four companies including two private equity funds have shown interest in acquiring the family’s holdings in the venture with the world’s largest reinsurer, one of the people said.