MUMBAI • Fortis Healthcare said it has received a joint investment proposal from two Indian business families, intensifying a race to gain control of the country's second-largest private hospital chain.
Hero Enterprise Investment Office and the Burman Family Office have made a binding offer to invest a total of 12.5 billion rupees (S$251.4 million) through a preferential share allotment, according to a Fortis exchange filing on Thursday. The proposal, which is subject to certain conditions, includes an immediate investment of 5 billion rupees and 7.5 billion rupees after diligence is completed within three weeks.
The race for Fortis is heating up as a TPG-backed Indian firm sweetened its initial offer, and Singapore-listed IHH Healthcare proposed a bid of as much as US$1.3 billion (S$1.7 billion), according to people with knowledge of the matter.
The competing proposals are the latest twist in the Fortis saga, with India's fraud watchdog and stock regulator probing the firm after Bloomberg News reported its founders took out at least 5 billion rupees without board approval.
"As the assets of Fortis are good, the company may get more competitive offers in the future," said executive vice-president for markets Sanjiv Bhasin at brokerage India Infoline. "It has potential to move up to 175 rupees a share."
The Hero and Burman group entities are shareholders of Fortis, with about a 3 per cent stake in the hospital operator, according to the offer letter from the investors attached to the filing. The two entities said they are concerned about Fortis' future and the company requires funding for its immediate needs as well as to develop its long-term value.
"Our offer is simple and does not envisage any changes to the current structure, operations and assets of the company," Mr Sunil Kant Munjal of Hero Enterprise and Mr Mohit Burman of the Burman Family Office wrote in the letter.
Its proposal "can be implemented in a fairly short period of time and will allow the company to focus on stabilising operations and on growth", they said.
Mr Munjal is chairman of Hero Enterprise and president of Dayanand Medical College and Hospital in Ludhiana, in the northern Punjab state, which has more than 1,500 beds, according to the letter.
The Burman family founded Dabur India, which sells consumer products from hair oil to packaged juices.
The two Indian groups had approached Fortis last month to discuss the possibility of a deal, though the talks were unsuccessful as the company's management had said they did not have the time to offer an opportunity for due diligence, according to the letter.
They are entering the fray as founders Malvinder Singh and Shivinder Singh were unable to repay loans and lost Fortis shares put up as collateral.
Both the brothers resigned from their posts at the company in February. Their stake in Fortis declined to less than 1 per cent from 34.4 per cent previously.
BLOOMBERG
