Indian healthcare major Fortis Healthcare Ltd, through its Singapore-based subsidiary, has struck a deal to sell Altai Investments Ltd – which runs Hong Kong-based Quality Healthcare, to international healthcare group Bupa for $355 million.
Quality Healthcare offers services like diagnostics, primary healthcare and day care specialities. This is the second such deal with Bupa which earlier also acquired the Australian dental chain from Fortis.
“We have taken a strategic decision to intensify our focus on our core hospital and diagnostic business in India with a clear path to profitability. The divestment also enables us to further strengthen our balance sheet and substantially improve our net debt equity ratio, creating further room for growth,” said Malvinder Singh, executive chairman and Shivinder Singh, executive vice chairman of Fortis Healthcare Limited in a joint statement.
According to the company, the offer price is reflective of the value and efficiencies added through improved operations and the introduction of new and specialised medical centres when Quality was a part of Fortis. The company was acquired by Fortis in 2010 for $200 million.
The deal is expected to be completed by end of this month. J P Morgan and Religare Capital Markets acted as financial advisors to Fortis for this transaction.
After this divestment, the net debt of the company is expected to be less than 0.3x down from 1.6x as on September 30, 2012.
The India revenue of the company will make around 95 per cent of company’s revenue.
Keeping with its India focus, this year the company plans to add over 1,000 beds from greenfield projects. Earlier in May this year, it launched Fortis Memorial Research Institute in Gurgaon – a multi super specialty hospital with a capacity of 1,000 beds. Two more projects, one each in Ludhiana and Chennai (Arcot Road) are nearing completion and will be commissioned in the next few months.
As reported by VCCircle, the moves are part of a strategy flip where Fortis Healthcare Ltd acquired the promoters-owned company which brought assets across Australia, New Zealand and much of Southeast Asia. The $665 million deal, completed in January 2012, was part funded by the promoters themselves who invested in redeemable preference shares of an entity controlled by Fortis Healthcare.
Over the last one year, the public listed firm sold two key businesses which were part of the Asia-Pacific expansion strategy. It sold its stake in Australia’s Dental Corporation Holdings Ltd to Bupa Australia Health Pty Ltd and recently sold operations in Vietnam under Fortis Hoan My Medical Corporation to Chandler.
Fortis CEO Vishal Bali recently put down his papers to venture on his own.