Fortis Healthcare raising $100M from IFC, separately up to $83M through IPP

Fortis Healthcare Ltd is looking to raise $100 million (Rs 54.2 crore) from International Finance Corporation (IFC) through a mix of equity and foreign currency convertible bonds (FCCB).

The board of directors of the company have authorised the issuance of 28.6 million shares to IFC for a total value of $45 million. In addition, the company will also issue foreign currency convertible bonds (FCCB) worth $55 million to IFC convertible at the floor price of Rs 99.09, according to a release filed by the company in the stock market.

Simultaneously, the firm is also issuing between 34.9 million to 45 million fresh shares through an Institutional Placement Programme (IPP), the company disclosed.

At the current market price, Fortis will be able to raise around Rs 350-450 crore through the IPP. Coupled with the fund raising through IFC, the healthcare firm would scoop between Rs 900-1,000 crore.

As per VCCircle estimates, IFC will pick up around 6 per cent of the diluted capital (post IPP) and if it goes for conversion of the FCCB into shares, it will eventually hold around 11.5 per cent stake in Fortis. This would make it the single largest institutional investor in the firm.

The series of share issues will also allow promoters of Fortis, Malvinder and Shivinder Singh, to meet the minimum public holding norms for a listed company. The promoters hold around 81 per cent in the firm which needs to come down to 75 per cent by June 30, 2013.

For IFC, the private sector investment arm of World Bank Group, this is yet another exposure in the diversified business group promoted by the Singh brothers. IFC had previously invested in Fortis’ diagnostics chain subsidiary SRL besides the flagship holding company for the financial services business Religare Enterprises.

Healthcare sector, essentially healthcare companies which operate hospitals, have seen a lot of attention from investors and private equity players recently. Some of the more recent big ticket investments in the sector include Manipal Health Enterprises raising $180 million from India Value Fund and Quality Care India raising $110 million from Advent International among others.

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