MUMBAI/KUALA LUMPUR (BLOOMBERG) - Fortis Healthcare Ltd, India's second-largest private hospital chain by market value, is weighing a buyout of the Singapore-listed business trust that owns some of its clinics, people with knowledge of the matter said.
The New Delhi-based company is considering making an offer for all the units it doesn't already own in RHT Health Trust, which has a market value of S$698 million, according to the people.
RHT Trust requested for a trading halt around 11:14am on Monday after being queried by the Singapore Exchange around 9:12am for unusual price movements in its shares. The stock was up 3.5 cents or 4 per cent to 90 Singapore cents this morning.
Deliberations on the potential take-private deal are at an early stage, and Fortis Healthcare could decide not to proceed with a bid, the people said, asking not to be identified because the information is private.
Fortis Healthcare would first need to raise cash to fund the buyout, which it plans to do by bringing in a new investor, the people said. IHH Healthcare Bhd is among strategic bidders considering an investment in Fortis Healthcare, according to the people. They are competing with KKR & Co, TPG and Bain Capital, which have also been in talks about a possible deal with the Indian hospital operator, the people said.
Any deal would add to US$7.4 billion in takeovers of Singapore-listed companies over the past 12 months, according to data compiled by Bloomberg.
Taking full ownership of RHT could boost Fortis Healthcare's profit, as it would remove the need to pay fees to the trust for providing some services at hospitals operated by Fortis Healthcare, the people said. It currently holds 29.6 per cent of RHT, exchange filings show.
Representatives for Bain, Fortis Healthcare, KKR and TPG declined to comment. IHH said in an emailed statement it's "always looking at various value accretive opportunities," declining to comment on any specific transactions. A representative for RHT said the company hasn't been informed of any such plan by Fortis Healthcare.
At least some of Fortis Healthcare's fundraising could come through a sale of compulsorily convertible debentures, though the company hasn't decided on the exact structure, according to the people.
A deal agreement could be complicated by a legal dispute between Fortis Healthcare's founding Singh brothers and Japanese drugmaker Daiichi Sankyo Co, the people said. Daiichi has been seeking enforcement of a Singapore arbitration award against the Indian businessmen. Following a petition by Daiichi, the brothers have given an undertaking not to sell assets without seeking permission from the Delhi High Court. The Singhs have challenged the arbitration award in a Singapore court and are opposing Daiichi's plea for enforcement of the award in India.
The Singh brothers have also been in discussions about selling a stake in SRL Ltd, the pathology-lab chain being spun off from Fortis Healthcare as a separate listed company, the people said. They have held talks with private equity firms including KKR, TPG and Bain, according to the people. The brothers are seeking a valuation of about 62 billion rupees (S$1.31 billion) for the business, one of the people said.
Religare Enterprises Ltd, which is also backed by the Singh brothers, is separately negotiating the sale of a stake in medical insurer Religare Health Insurance Co., according to the people. The Mumbai-listed company is also in talks to sell a controlling interest in small-business lender Religare Finvest Ltd, the people said.
No final deal agreements have been reached, and there's no certainty any discussions will result in a transaction, the people said. Representatives for Religare Enterprises and the Singh brothers' holding company declined to comment.