India's Fortis rejects TPG-backed buyout bid

The deal will see IHH invest INR40 billion in the hospital business through a preferential allotment of shares at INR170 each, along with a tender offer for up to 26% of FHL at the same price, aggregating up to INR33 billion, according to a filing. This represents a significant premium to FHL’s closing price of INR142.20 on July 12.

The TPG consortium had offered to pay INR21 billion through a preferential allotment at INR160 per share, with Manipal paying an additional INR11.3 billion to buy out existing private equity investors in FHL’s diagnostics subsidiary SRL. Manipal would have merged with the hospital business to create India’s largest provider of healthcare services by revenue.

FHL set a minimum investment of INR15 billion when it requested binding bids in May. It also required funding for its acquisition of Singapore-based RHT Health Trust, and SRL exit. The request came after management’s acceptance of an INR18 billion offer from a consortium comprising Hero Enterprise Investment Office and the Burman Family Office met with resistance from shareholders.

China-based Fosun International and Radiant Life Care, an Indian healthcare chain backed by KKR, had participated in the original bidding process along with IHH, Manipal, and the Hero-Burman consortium. FHL requested revised offers from Hero-Burman, Manipal and IHH in May, but in the end only IHH and the TPG-Manipal consortium submitted bids.

FHL said the IHH bid was selected both for the significant primary fund infusion and for the simplicity of the transaction structure, which allows for closing in a shorter time frame with fewer approvals required. The transaction will create the world’s second-largest provider of integrated healthcare services by market capitalization, and the largest in Asia, with a presence in nine countries through more than 90 hospitals and over 20,000 beds.

FHL operates India’s second-largest hospital chain, with 45 facilities either operational or under development, and 368 diagnostics centers through SRL. For the year ended March 2018 the company reported INR6.6 billion in revenue, up from INR6.5 billion the year before. Over the same period its net loss shrank from INR747 million to INR637 million.

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