Billionaire brothers Malvinder and Shivinder Singh, along with the companies promoted by them, may pocket around Rs 837 crore ($190 million) by selling their majority stake in the IPO-bound diagnostics chain Super Religare Laboratories (SRL) to their own majority-owned public listed firm Fortis Healthcare (India) Ltd.
The hospital firm had earlier said that it would appoint one of the ‘Big Four’ firms to independently value the stake purchase from its own promoters to set aside any concern of corporate governance. But on Tuesday, it stated that it would go ahead with the valuation at which private equity firm Avigo Capital is buying shares in SRL in a pre-IPO transaction.
Avigo Capital invested Rs 100 crore for post-issue stake of 9.27 per cent. Back-of-the-envelope calculations show that Avigo would pick around 5.31 million shares for the stake at around Rs 188 per share. If Fortis Healthcare (India) buys shares held by the Singh brothers and group firms, including a public-listed company, at this price, it would have to shell out Rs 837 crore.
Part of this will go to Oscar Investments, a public-listed firm that owns 32 per cent in SRL and is currently the single largest shareholder of the diagnostics firm. Oscar will receive Rs 313 crore ($71 million) from Fortis Healthcare (India).
If this is also taken as a benchmark for the proposed public issue, SRL will be able to raise a further Rs 426 crore or just a tad below $100 million in the IPO. After the IPO, Avigo’s stake in SRL will drop to 6.6 per cent while Fortis Healthcare (India) will own 55.69 per cent.