StanChart PE raises holding in Fortis Healthcare to 2.7% with preferential allotment

Standard Chartered Private Equity (StanChart PE) has raised its stake in Fortis Healthcare Ltd, the second largest healthcare firm by market cap, by investing Rs 36.6 crore afresh in a preferential allotment, as per a stock market disclosure.

StanChart PE had previously committed to invest up to Rs 87.7 crore through the preferential allotment in Fortis but invested a part of this through secondary market share purchases. With the subscription to fresh shares, it has now completed its investment in Fortis.

It has put in around Rs 300 crore in total to buy shares of the company, of which around Rs 250 crore was invested into the company through a mix of foreign currency convertible bonds (FCCBs), open market purchases and participation in an institutional placement programme (IPP) early this year.

The PE firm started by acquiring shares of Fortis in its IPP early this year where it invested around Rs 37 crore. It went on to invest around Rs 47 crore to buy Fortis shares in the open market last month and also invested $30 million (Rs 175 crore) through a FCCB issue.

In the latest tranche, it picked 3.7 million equity shares at a price of Rs 99.09 per share through Standard Chartered Private Equity Mauritius III Ltd (SCPE).

StanChart’s direct holding currently stands at 2.7 per cent. Assuming full conversion of FCCB into shares it will own around 5.7 per cent stake of Fortis given outstanding shares and convertible securities of the firm, as per VCCircle estimates.

This deal is similar to IFC’s investment in Fortis. The private investment arm of the World Bank committed $100 million (around Rs 570 crore then) to Fortis and invested the amount through a mix of preferential allotment, FCCB and participation in the IPP. IFC also cut down on the size of the proposed preferential allotment to the extent it invested in Fortis through the IPP.

For Fortis, the preferential allotment completes its multi-tiered funding round which cumulated to Rs 1,040 crore.

“We are pleased to have on board long-term strategic investors like IFC and SCPE who believe strongly in the long-term growth potential of the company. The healthcare sector in India is poised for significant growth and Fortis Healthcare is ready to capitalise on emergent opportunities by continuing to provide world-class healthcare to patients in India,” Vishal Bali, group CEO of Fortis Healthcare, said.

The company has separately also raised a significant amount through overseas asset sales by divesting its business in Australia and Vietnam. Through divestment and capital raised, the company managed to lower its net debt to equity ratio from 1.6 as on September 30, 2012 to 0.7 as on June 30, 2013 and is aiming at a ratio of 0.5 in the near future.

(Edited by Joby Puthuparampil Johnson)

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