"The partnership involves a Rs 550 crore long-term investment by KKR, together with its affiliates and select investors, in PCR, the holding company for the Apollo Hospitals Group," the healthcare group said in a statement.
The PE fund will subscribe to the convertible debentures issued by Prathap Reddy's holding company PCR Investments with an option to convert these debentures into equity shares of listed Apollo Hospitals at the end of five years, Apollo Hospitals said.
The promoters also will have the right to buy back these instruments at the end of two years, it added.
At the end of September quarter, PCR Investments held 18.42 per cent stake in Apollo Healthcare.
"The investment is in the form of 5 year callable security that consolidates existing debt at PCR and initiates a partnership in the healthcare sector across the two firms," Apollo Hospitals said.
Commenting on the development, Apollo Hospitals Group Chairman Pratap C Reddy said: "This transaction is the culmination of very involved deliberations with the clear intent of working together to create long term value for the group and reflects our philosophy of partnering with players who have a long term view and deep understanding of the healthcare space."
Kohlberg Kravis Roberts (KKR) also said it is looking forward to partnering with the domestic healthcare major.
"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 Dr Reddy and family who have created one of India's finest healthcare businesses," KKR India CEO Sanjay Nayar said on the development.
This partnership that has been initiated through the company's alternative credit business in India, and will look to pave the way for a much broader engagement between the firms as partners, he added.
Shares of Apollo Healthcare closed at Rs 878.95 apiece, down 1.35 per cent on the BSE.