Standard Chartered Private Equity (StanChart PE) has shelled out Rs 47.25 crore ($7.4 million) to buy an additional 1 per cent in Fortis Healthcare Ltd, the country’s largest healthcare services firm by revenues, taking its total commitment in the firm to around Rs 172 crore ($27.5 million).
The PE firm acquired shares through open market transactions, adding to its previous investment of Rs 37 crore early this year, where it had picked around 0.9 per cent. It had previously invested in the company’s institutional placement programme (IPP) three months ago in which PremjiInvest and IFC had also participated.
Last month, it committed a further Rs 87.7 crore through a preferential allotment which is yet to be completed. As against these other investments, the latest transaction would not lead to money going into Fortis as the shares were acquired from an existing investor.
For StanChart PE, this is only the second investment in the healthcare space and the first in the healthcare services domain in the country. Nine years ago, it had invested in Aurobindo Pharma through Merlion India Fund, a joint venture between Standard Chartered PE and Temasek, and exited the firm in 2009, as per VCCEdge, the financial research platform of VCCircle.
Its investment in Fortis follows a commitment of $100 million by IFC in the company. IFC, the private investment arm of the World Bank, committed the investment through a mix of preferential allotment, stake purchase in the IPP besides a foreign currency convertible bonds (FCCB) issue.
The IPP issue was done by the Singh brothers to meet the minimum public holding norm for a listed company and also to raise cash to retire debt of the company.
Fortis is also raising a further $30 million through FCCBs. This development takes the total fresh fundraising to around $170 million over the past four months. Coupled with the asset sale in which it sold off two of its businesses in Australia and Vietnam for around $366 million in total, it has garnered or received commitments over $530 million since the beginning of the year.
Part of this money will be used to reduce the debt pile-up on its balance sheet inherited from the large deal where it bought privately held international healthcare assets owned by its own promoters a couple of years ago.
Fortis had total debt of Rs 5,163.7 crore as of March 31, 2013. Last week it said it has cut its net debt to Rs 3,283 crore in the quarter and has a net debt to equity ratio of 0.7x versus 1.1x as of March 31, 2013.
(Edited by Joby Puthuparampil Johnson)