IHH offers to invest up to $795m in Fortis

Hospital chain also gets improved bid from Indian consortium, ahead of key meeting

Mainboard-listed IHH Healthcare has stepped up its pursuit of Fortis Healthcare by offering to invest up to 40 billion rupees (S$795 million) in exchange for equity in the Indian hospital chain.

The offer by Malaysian-based IHH came ahead of yesterday's meeting by the Fortis board to consider its options.

IHH said in a regulatory filing yesterday that it issued a strictly non-binding letter to the Fortis board on Wednesday expressing its readiness to inject up to 40 billion rupees through a preferential allotment of equity shares at a price not exceeding 160 rupees a share.

"The infusion is intended to fund the buyout of the assets from RHT Health Trust as well as provide immediate liquidity towards working capital and infrastructure upgrades," said IHH.

Fortis is the sponsor of the mainboard-listed RHT Health Trust. In February, RHT's trustee-manager had signed a $950 million deal for Fortis to buy the trust's entire portfolio.

Fortis - India's second-largest hospital chain with about 30 hospitals - has been struggling with insufficient cash and increased debt. Regulators are also investigating allegations that its founders took funds without board approval. The founders deny any wrongdoing.

Last week, IHH was reported to have offered to buy Fortis at a price valuing the chain at about US$1.3 billion (S$1.7 billion), higher than the roughly US$1.2 billion valuation offer made by Fortis' Indian rival Manipal Health Enterprises.

But Fortis had initially declined to consider other options while it was in talks with Manipal.

On Monday, the Fortis board said it would meet yesterday to consider all options.

In a regulatory filing late on Tuesday, Fortis said it had also received a letter from Chinese conglomerate Fosun International offering to invest up to US$350 million, or 156 rupees per Fortis share, in return for less than a quarter of the firm.

And yesterday, Fortis said it had received an improved binding offer worth 15 billion rupees from Hero Enterprise Investment Office and Burman Family Office, up from the Indian consortium's previous offer of 12.5 billion rupees.

The consortium's proposal is to invest 5 billion rupees via the preferential issue of equity shares and 10 billion rupees through the issue of warrants.

IHH was engaged in a takeover battle with Fortis in 2010, when both parties sought control of Singapore's Parkway Holdings, then Asia's biggest healthcare operator.

IHH eventually ended the tussle with a $3.5 billion price tag and delisted Parkway. It subsequently consolidated its hospital operations, largely in Singapore, Malaysia and Turkey, before launching a dual listing in Singapore and Malaysia in 2012.

The group now runs healthcare facilities under the Mount Elizabeth, Gleneagles, Pantai, Parkway and Acibadem brands and has more than 10,000 licensed beds in 50 hospitals across 10 countries.

IHH shares closed up one cent to $2.04 yesterday.

A version of this article appeared in the print edition of The Straits Times on April 20, 2018, with the headline 'IHH offers to invest up to $795m in Fortis'. Print Edition | Subscribe