Fortis India Nearing Takeover Of Fortis Healthcare International

By Reuters

  • 20 Dec 2011

Hospital chain Fortis Healthcare (India), controlled by billionaire brothers Malvinder and Shivinder Singh, is on course to raise funds and close a takeover of Singapore-based associate Fortis Healthcare International by the end of December, Mavinder Singh said.

The firm said last month it would buy the Singapore firm for $665 million.

"It's getting closed. I have no worries on it," Singh, who is chairman of Fortis, said in an interview on Monday.


The brothers control Fortis Healthcare (India) and entirely own Fortis Healthcare International.

Fortis India is raising $175 million of debt to fund the deal, which would raise its net debt to $1 billion and debt-equity ratio to 1.5 from under 0.5 now.

By March, the company aims to cut the ratio to below 1 through an infusion of equity into the group, though it will not sell shares in the parent company, Singh said.


In a month, diagnostic services business Super Religare Laboratories Ltd SRL.L will get a fresh infusion of private equity, which will help make it debt-free, Singh said, without specifying SRL's current debt.

"Second is that we are looking at asset-light model, and by those two methods we will address the (debt-equity ratio of) 1-1 by March," he said.

Earlier this year, Fortis bought an 86 percent stake in SRL from the Singh brothers.


Private equity firms Sabre Partners and Avigo Capital Partners then bought separate stakes in SRL, which at the time was looking to raise funds through initial share sale that has since been delayed.

Singh didn't elaborate on what he meant by an "asset-light model", but a source close to Fortis, who did not want to be identified, said the company was looking to raise funds by transferring some of its hospital buildings to a property trust that would be listed in Singapore.

The source said the company was aiming raise about $300 million through a property trust. Singh declined to comment.


Once the takeover is closed, Fortis Healthcare will focus on enhancing efficiencies and synergies between India and overseas operations, Singh said.

The company does not plan to enter new international markets or look aggressively for acquisitions, he said.

"...That's not our priority at this point," he said.


Fortis India's shares have plunged about 40 percent since the deal was announced.

"My own sense is there is clearly somebody who is trying to create instability in the stock. From governance perspective, I have no issues in what we have done," Singh said.

A source close to Fortis said Fortis International's chief financial officer and Fortis India's company secretary have recently offered to resign. Singh declined to comment.

Fortis India CFO Yogesh Sareen quit last month.

Shares in Fortis, valued at $700 million, closed 1.79 percent lower at 90.75 rupees on Monday.

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