This is despite previous delays in payments from the Saudi government, which could have pushed the company to default on a syndicated loan, he said.
Aster, which operates hospitals, clinics and pharmacies in the Gulf and India, is attracted to Saudi Arabia because of the size of the market compared with other Gulf states, and also because of ownership rules, which would let Aster own up to 100 percent of a business, said Azad Moopen.
“We consider Saudi a good market despite payment difficulties which we had there,” he said.
Aster obtained a $295 million loan from India’s Axis Bank in April. The loan replaced and repaid $155 million of a $295 million facility which the firm raised in 2015. Aster replaced the facility to obtain better terms, such as a longer maturity and looser financial requirements for its debt-to-equity ratio.
The decision to look for better terms was triggered by delays in payments of about $150 million from Saudi Arabia’s ministry of health. Many companies in the Saudi market, especially construction firms, have suffered such delays as government finances are squeezed by low oil prices.
“Payments were overdue for nearly 1-1/2 to two years,” said Moopen, and were not made for the whole of 2016.
By early 2017, with $150 million pending, “we were not sure when we were going to get this money, and we didn’t want to default, that’s why we wanted better terms from the banks.”
Aster’s new loan facility is being syndicated by Axis, though no bank has joined the loan yet. It has a 10-year tenor, while the previous facility was for five years.
Almost half of the amount due from Saudi Arabia has been repaid in 2017. The ministry of health asked for a discount on the total debt and the company agreed, Moopen said without elaborating.
The payment delays were related to Aster’s 250-bed Sanad Hospital in Riyadh, Aster’s only facility in the kingdom. The ministry of health did not respond to a request for comment.
Aster also has a hospital in Qatar. “The Aster Qatar Hospital has been approved by authorities and has started functioning, even though the official inauguration has not been done,” Moopen said.
“We shall be waiting for the prevailing situation to crystallize for the official launch,” he said when asked about the diplomatic crisis that erupted this week between Qatar and neighboring states.
The company filed a prospectus for an initial public offer (IPO) of shares in India in June last year. The IPO is now expected to take place in the fourth quarter of 2017, with Axis Bank, Bank of America Merrill Lynch and Kotak Mahindra Bank as lead banks, said Moopen.
(Reporting bAdditional reporting by Katie Paul; Editing by Andrew Torchia; Editing by Mark Potter)