The board of Fortis Healthcare Ltd decided on Thursday to form a panel to evaluate all binding offers, as four suitors vie for India’s second-largest hospital chain.
The expert advisory committee will submit its recommendations by 26 April, Fortis said in a stock-exchange filing after a board meeting.
The company has received binding offers from TPG-backed Manipal Health and a consortium of Hero Enterprise Investment Office and the Burman Family Office. It has also received non-binding offers from Malaysia’s IHH Healthcare and China’s Fosun International.
The committee will be chaired by Deepak Kapoor, former chairman and CEO of consultancy firm Price Waterhouse Coopers, India. Its other members will be Renuka Ramnath, founder of private equity firm Multiples Alternate Asset Management, and Lalit Bhasin, president of Society of Indian Law Firms and managing partner at Bhasin & Co. Standard Chartered Bank, the company’s financial adviser, will assist the committee and the board, Fortis said.
On a conference call, Fortis executives said it will consider all binding bids that are submitted to the committee before 26 April.
Separately, the board has taken note of a request made by two of its investors, Jupiter India Fund and East Bridge, for an extraordinary general meeting (EGM) to remove four directors and nominate three new independent directors, it said. The management has been directed to organise the EGM at the earliest, it added.
Meanwhile, the company has appointed Rohit Bhasin, a chartered accountant with experience in companies such as PwC, as an independent director with immediate effect for five years.
Earlier in the day, IHH Healthcare as well as the consortium of Hero Enterprise of the Munjal family and the Burman Family Office of consumer goods firm Dabur revised their offers to invest in Fortis.
IHH has now offered to invest Rs 4,000 crore in Fortis through a preferential allotment of shares at Rs 160 apiece, according to stock-exchange filings on Thursday.
IHH said the infusion is intended to fund Fortis' buyout of the assets from Singapore-listed RHT Health Trust as well as provide immediate liquidity towards working capital and infrastructure upgrades.
The revised binding offer from Hero Enterprise and the Burmans entails an investment of Rs 1,500 crore in Fortis, up from Rs 1,250 crore proposed earlier. The revised offer is for investing Rs 500 crore through preferential shares and Rs 1,000 crore via warrants. The first offer, made last week, involved an infusion of Rs 500 crore and Rs 750 crore after due diligence.
The Munjal-Burman combine is seeking two board seats against one earlier given the sizable investment. “This should not be understood to mean that we are seeking to take over control/management and/ or directly policy decisions of the company. We recommend that more independent directors be added to the board of directors,” it said.
IHH, too, had submitted its initial proposal last week, though it subsequently said that the Fortis board had refused to discuss the offer citing an agreement with another bidder, TPG-backed Manipal Health.
Last month, the Fortis board had approved the sale of its hospital business to Manipal Health. Manipal sweetened the offer last week amid shareholder concerns regarding lower deal valuation and prospects of other rivals entering the fray. The revised offer valued Fortis’ hospital business at Rs 6,061 crore, or Rs 116 per share, up almost 21% from the previous offer. It valued Fortis Healthcare at Rs 155 a share.
Apart from the Munjal-Burman combine, Manipal Health and IHH Healthcare, China's Fosun International has also made an offer to invest in Fortis. Fosun made an unsolicited non-binding proposal to provide Rs 100 crore ($15 million) in the next 45 days to support the immediate cash needs of Fortis and invest up to $350 million in total.
Hero Enterprise is led by chairman Sunil Munjal, part of the family that runs Hero MotoCorp Ltd, India’s biggest two-wheeler maker. The Burman family is the promoter of Dabur India Ltd. The two family offices hold around 3% of Fortis through their affiliates and group entities.