Fortis Healthcare stake sale: Munjal-Burman seek level playing field

Hero Enterprise has criticised the Fortis Healthcare board’s latest decision and has sought a level playing field for all the bidders.

The board will meet on May 10 to select an investor, and the deadline for submitting bids has been extended to May 1. Fortis also said TPG-backed Manipal Hospitals would have a chance to revise its offer till May 6, based on bids received on May 1. This is according to the ‘obligations’ towards the Manipal-TPG consortium, Fortis said. 

Hero Enterprise-Burman family office, which sought to invest Rs15 billion in the hospital chain, has objected to the decision.

“We are a bit surprised as we had assumed that the final bids were submitted and the process now was only to review and choose the best offer. We strongly believe that there should be equal opportunity given to all bidders without any unfair advantage to any one party,” said Sunil Kant Munjal, chairman of Hero Enterprise.

“However, we still welcome this move by the Fortis board and we hope that the board will repose their confidence in us and choose the best offer that addresses the immediate needs of the prestigious institution,” he said.

An expert advisory committee, comprising Lalit Bhasin, managing partner at Bhasin & Co, and Deepak Kapoor, former chairman and CEO at PwC, would meet on May 8 to deliberate on the various bids received. Sources said the committee might have multiple meetings depending upon the number of bids put forward by the reconstituted board.

Fortis has also notified the stock exchanges about an extraordinary general meeting on May 22, to consider the resolutions proposed by the minority shareholders. 

In its meeting on Friday, the Fortis board approved the appointment of the three shareholder nominees as additional independent directors on the board — Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee. The appointments were made on recommendations of Jupiter India Fund and East Bridge Capital Master Fund which own around 12 per cent stake in the hospital chain.

Meanwhile, a news report has pointed out at least two of these new directors — Rajagopal and Chakraborty — have affiliations with firms that have existing relationships with the suitors for Fortis. 

VCCircle said in its recent article that Rajagopal is the chairman of JM Financial Singapore and an advisor to the financial services firm on its international relationships. JM Financial is also an advisor to one of the bidders, the Munjal-Burman consortium. 

An e-mail sent to JM Financial, Hero Enterprise and Fortis enquiring about conflict of interests, if any, remained unanswered. 

VCCircle also highlighted that Chakraborty is an advisor to Fullerton India Credit Company, which happens to be a step-down subsidiary of Temasek Holdings. Temasek has a stake in Manipal Health Enterprises, another bidder for Fortis. Temasek denied to VCCircle claims of conflict of interest and said Chakraborty holds a non-executive advisory role in Fullerton.

“Each of the new independent directors need to come clean and disclose if they have an association with Fortis, the bidders and their transaction advisors,” said a corporate governance expert.