In yet another strategic business move, public-listed Fortis Healthcare Ltd is spinning off part of its healthcare services business into a separate unit, which would be listed on the Singapore Exchange Securities (SGX-ST) and open up possibilities for separate fundraising plans for the business. The move, according to the company, will help deleverage its balance sheet and create an asset-light model.
In a disclosure on Tuesday, Fortis has said that it is denominating its business into a clinical establishment division and a medical services division, and list the former on SGX-ST. The listing will be through Religare Health Trust, whose mandate is to principally invest in medical and healthcare assets and services in Asia, Australasia and emerging markets.
The firm has received an in-principle approval to list in Singapore last week.
“In continuation of its strategic intent to align the company with globally emerging trends, where healthcare delivery companies are evolving innovative and cost-effective business models to strengthen operations and focus on their core activity of providing healthcare services, an asset-light model is advocated,” the company has announced on stock exchanges on Tuesday.
Fortis Healthcare scrip rose 2.02 per cent to close at Rs 103.35 a share on the BSE in a flat Mumbai market.
The Fortis group, with an accumulated debt of Rs 5,000 crore, is looking at deleveraging its balance sheet through the exercise. According to an earlier media report, Fortis is eyeing to raise up to Rs 2,000 crore from the Singapore listing by selling two-third of its shareholding in the Trust.
Fortis Healthcare is currently valued at Rs 4,187 crore ($760 million).
Part of this debt got piled up due to the recent moves by the group. A few months ago, in a flip-flop in management strategy, billionaire brothers Malvinder & Shivinder Singh sold their privately held overseas healthcare assets to the public-listed firm in a deal worth $665 million.
Fortis Healthcare acquired Fortis Healthcare International Pte, consolidating the global healthcare business under a single roof. “The purchase consideration for equity shares of Fortis International amounting to $262 million (after taking into account the outstanding liabilities of Fortis Healthcare International) is being funded through infusion of $262 million against redeemable preference shares of FAHPL issued to the promoters of the company,” the firm had said in the past.
This essentially meant that the Singh brothers part-funded their own public-listed firm to buy a company owned by them (more on that here). Early last year, the promoters also sold their entire holding of 74.59 per cent in IPO-bound diagnostics chain SRL to Fortis Healthcare for Rs 803 crore.