With the acquisition of a cancer hospital in Singapore on Thursday, Fortis Healthcare has completed three acquisitions in the last five months. However, the healthcare major is looking to give further impetus to its international growth plans. Group Chairman Malvinder Mohan Singh tells Devjyot Ghoshal that international business will be bigger than domestic operations this year. Edited excerpts:
Seven months after the bid for Parkway, Fortis is back in Singapore with an acquisition. How significant is this S$33 million purchase?
If you look at the region, Singapore is a very developed healthcare market, with very strong players, good capability in this market space. But there is clearly an opportunity for growth and for us, this is an important start of a much larger journey. Therefore, while this facility may not be that large, it gets us into this market and builds a base for a lot more important, strategic actions and developments.
Is this then, in a sense, the restart of a process which had stopped when you decided to exit Parkway?
The process didn’t stop. Our strategic plan remains the same, which is to be an integrated healthcare player in this region, and we have been executing that ever since. We have made an acquisition of Quality Healthcare in Hong Kong, which is the largest private healthcare network there, and we have acquired a large shareholding in Dental Corporation, the largest chain of dental clinics in Australia and New Zealand. And now, we are getting into this space and we have also got a pathology business in the Middle East. So, if you look at each of these actions that have happened over the past many months, they are all aligned and linked to our strategic roadmap.
No regrets, then, about exiting Parkway?
There has never been regret. Parkway was a vehicle in our journey towards achieving what we want to do, and now there are a different set of vehicles that we will use.
What is the strategy going ahead, since so far you have only entered developed markets?
It is not a matter of only looking at developed markets to start with. Yes, Hong Kong, Singapore and Australia are all developed, yet we have a very strong base in India. There is (also) the Middle East business. And, there are a bunch of opportunities in other emerging markets, but you also need to get started in a market with a particular size and scale in terms of a business. So, for Hong Kong, our entry point with Quality Healthcare, in Australia it was Dental Corporation. In other markets as well, we have the option of either going organic... or you start with an acquisition and then you build from there within that business model and you add additional verticals within the healthcare space... There is significant opportunity in various emerging markets and one by one we will get into these markets and develop our business models.
Does that mean more acquisitions?
In this region, yes.
Earlier you had said that Fortis would be looking at a secondary listing on the Singapore exchange and also the possibility of a REIT. How far has that progressed?
We are evaluating it... At the right time, we will make the announcement.
What really attracts Fortis to Singapore?
I think from a healthcare viewpoint, Singapore has a very strong public healthcare system that is probably among the leading ones in the world. The capability is from the doctor fraternity, medical fraternity, medical education system, so it has got a huge pool of talent which can be part of a building process as one moves forward. In terms of quality of delivery, it is very high and cutting-edge. It’s been as a hub within the region, in terms of healthcare. Therefore, if you want to build out an international business, this is probably a very strong place to be based out of. So, our international business (Fortis Global Healthcare) is headquartered here.
Fortis had taken a decision to realign your verticals, and the international business was separated and based out of here. How is the international business growing, in comparison to the growth in India?
The Indian business is going exceedingly well. There is huge opportunity for growth and we are committed to making whatever investments we need to make to grow that. And, the business has got to a certain scale and size where our ability to take it to the next level is that much easier... Over the next few years, I see that business in India continuing to do very well and being able to expand down the pyramid to multiple layers.
I think our intention of segregating international and India (businesses) was a couple of things. One, we did not want to defocus the management team. There is a very large agenda and opportunity in India, which we want them to focus on, to consistently work, lead and drive that, and strengthen the company and our performance.
On the other hand, the international business, as we scale it up, will be very acquisition -focused and, therefore, we did not want to strain the Indian balance sheet with this acquisition focus. So, we wanted to keep it separate. On Thursday, the family is the only shareholder in this. Over time, we will bring outside shareholders and at some point, list it. It will be an international listing.