India's Fortis weighs competing buyout offers

The panel will evaluate all binding offers and make its recommendation to FHL's board by April 26, according to a regulatory filing. At the time of the announcement FHL had received binding offers from MHEPL and a consortium comprising Hero Enterprise Investment Office and Burman Family office, along with non-binding offers from Malaysia-based IHH Healthcare and China's Fosun International. Radiant submitted its non-binding offer after FHL's announcement.

MHEPL's bid represents the equivalent of INR116 per share for the hospital business of FHL, which will be demerged into MHEPL to create a listed entity in which FHL shareholders will receive equity. MHEPL will issue shares amounting to up to INR40 billion on the public market following the merger. Separately, MHEPL's parent Manipal Education & Medical Group will purchase a 31% stake in FHL's diagnostics subsidiary SRL from existing private equity investors, which have not been identified.

The offer by the Hero-Burman consortium consists of a direct investment of INR15 billion in FHL, up from a previous offer of INR12.5 billion comprising INR5 billion up front and INR7.5 billion following due diligence. In exchange for the increased investment, which will not include a due diligence period, the consortium will gain two seats on FHL's board. It will also provide additional capital as needed to support Fortis' planned buyout of Singapore-based RHT Health Trust.

Radiant's is the largest of the non-binding offers; it includes a INR65 billion purchase of FHL's hospital network, which will be merged with Radiant into a listed vehicle, and a INR36 billion offer for SRL, which will be spun out into a separate company. The new listed vehicle will issue shares to support the RHT buyout. KKR holds a 49% stake in Radiant, having invested about $200 million last year.

Fosun's offer comprises a INR10 billion upfront investment, followed by a commitment of up to $350 million for newly issued shares following due diligence, while IHH has offered INR40 billion through a preferential allotment of equity shares.

FHL's board approved Manipal's offer last month, but the proposed deal has met with criticism from some of FHL's shareholders regarding the proposed valuation of the hospital chain. Japanese drug maker Daiichi Sankyo has also sought to block the deal while it pursues a court case against FHL's former promoters Malvinder and Shivinder Singh.

FHL's hospital chain is the second-largest in India, with 45 healthcare facilities either operational or under development. It also operates over 370 diagnostic centers through SRL. The company's total revenue came to INR47 billion for the year ended March 2017, up from INR44 billion the year before, according to its most recent annual report. Over the same period net profit grew from INR418 million to INR4.8 billion.

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• Topics
• South Asia
• Healthcare
• Buyouts
• Trade sale
• India
• TPG Capital
• KKR
• Exit