Lanka Raing assigns Initial Entity Rating to Asiri Hospital Holdings PLC

Asiri Hospital Holdings PLC (AHPLC), established in 1980, is part of the Asiri Health Group, which operates ~7 strategically located hospitals across Sri Lanka. The rating reflects Asiri Hospital Holdings PLC strong business profile as the Company operates both as an operating company and as a holding company. At present, the Company's investments are primarily focused on the private health care industry, where it enjoys very strong presence. The Company's core investments in ~11 subsidiaries comprise following services, i) Hospitals and Health Care Services, ii) Laboratory Services, iii) Health Care Education Services. The rating is constrained by the challenging financial position of Softlogic Holdings PLC, the majority shareholder (55.12%) of AHPLC. Softlogic Holdings PLC has reported a loss of LKR~9.1bn in FY24 (3MFY25: Loss of LKR~614.6mn) and an equity of LKR~7.0bn in 3MFY25 (FY24: LKR~43.8bn). AHPLC has sizeable exposure to Softlogic Group in the form of related party loans. These amounted to LKR~12.2bn (principal + interest due) as at 6MFY25, accounting for almost ~23% of the Asiri Group's asset base. The Auditor has given a qualified opinion on FY24 financials of the Company based on these related party loans.

AHPLC, on a consolidated basis, recorded revenue of LKR~15.0bn in 6MFY25 and profit of LKR~1.2bn. The Group has an asset base of LKR~54.7bn and equity of LKR~22.9bn as of 6MFY25. The Company has a leveraged capital structure (6MFY25: ~56.0%) and adequate coverages. The Company faces potential challenges with related party receivables, particularly if provisions need to be made against the loan.
The rating is dependent on Asiri Hospital Holdings PLC's (including its subsidiaries) exposure to the Softlogic Group. Any negative repercussions in this regard would lead to rating downgrade. Meanwhile, reduction in related party loans and measures taken to limit these in future will have positive implications. Meanwhile, sustaining its robust position in Sri Lanka private health care industry would be important.

About the Entity
Asiri Hospital Holdings PLC (“Company or AHPLC”) is a public limited liability Company, incorporated and domiciled in Sri Lanka under the Companies Act No. 17 of 1982, and re-registered under the Companies Act No. 07 of 2007 in 2007 and listed on the Colombo Stock Exchange in June 1986. AHPLC is majority-owned by Softlogic Holdings PLC, which holds ~55.12%. Merrill Lynch Pierce Fenner & Smith-TPG Growth III SF Pte Limited owns ~28.86%, and BBH-Tundra Sustainable Frontier Fund holds ~2.64%. The Board consists of ~6 directors, of which ~4 are Non-Executive Independent Directors, ~1 Non-Independent Non- Executive Director and ~1 Executive Directors. Mr. Ashok Pathirage, the Chairman of the Board, also serves as the Managing Director of the hospital chain.