Fortis Healthcare, India's second- largest private hospital chain by market value, is weighing a buyout of RHT Health Trust that owns some of its clinics.
According to people with knowledge of the matter, the New Delhi- based company is considering making an offer for all the units it does not already own in the Singapore Exchange-listed trust, which has a market value of $726 million.
Deliberations on the potential take-private deal are at an early stage, and Fortis Healthcare could decide not to proceed with a bid, the same people said.
RHT rose by as much 5.8 per cent yesterday, the biggest intraday gain in more than a month, prompting an exchange query. Units of the trust were up by 4 per cent before RHT requested a trading halt, pending a response to the bourse operator.
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 is among strategic bidders considering an investment in Fortis Healthcare.
Its rivals are KKR, TPG and Bain Capital, which have also been in talks about a possible deal with the Indian hospital operator.
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, people with knowledge of the matter said. It now holds 29.6 per cent of RHT, exchange filings show.
Any deal would add to US$7.4 billion (S$10.3 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 now 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 e-mail statement that it is "always looking at various value accretive opportunities", declining to comment on any specific transactions. A representative for RHT said the company has not been informed of any such plan by Fortis Healthcare.
At least some of Fortis Healthcare's fund raising could come through a sale of compulsorily convertible debentures, though the company has not decided on the exact structure.
A deal accord could be complicated by a legal row between Fortis Healthcare's founding Singh brothers and Japanese drugmaker Daiichi Sankyo, said the people. 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.