FIPB rejects Apollo Hospitals' proposal to raise FDI through rights issue

The rights issue of Rs 750 crore was planned to support the company's expansion plans and reduce debt

The Foreign Investment Promotion Board (FIPB) has rejected a proposal by Apollo Hospitals Enterprise Ltd (AHEL) seeking to allow Foreign Direct Investment (FDI) into the company through a Rs 750 crore rights issue. The decision was taken in a meeting held on September 29, 2015.

According to an FIPB announcement, the Board has approved 16 FDI proposals amounting to Rs 4,722 crore. However, it has rejected a few proposals including the one from AHEL.

Oone of the country's largest hospital chains, AHEL sought approval for allowing foreign investment in the share capital of the company "by the renunciation of the rights or otherwise, subject to RBI and other necessary approvals to residents outside lndia pursuant to the proposed Rights lssue," said the FIPB announcement. This is one out of the eight proposals rejected by the Board during the meeting.

Company sources said the matter is technical in nature and that it is in talks with the Board to resolve it. A senior official expressed hope that the technical issue would be addressed soon and it would be allowed to raise funds through FDI. This will not have an impact on AHEL's ongoing expansion plans, added the official on condition of anonimity.

AHEL received the approval of Board of Directors to raise around Rs 750 crore through rights issue in May this year. The fund raising was expected to back the company's proposed expansion plan and to bring down its debt level, which was around Rs 1,600 crore at the time.

The plans are to raise funds through rights issue to the existing investors.

The company's update on the expansion plans by the end of the quarter ended June 30, 2015, the projects which are expected to complete in FY 2016 and FY 2019 require a capex of around Rs 1,477 crore, out of which it has already invested around Rs 640 crore. The balance of Rs 837 crore is expected to be invested by a mix of internal accruals and the proposed rights issue.