Fortis shares jump 24% as Malvinder and Shivinder Singh resign from board

The main shareholder Singh brothers and their affiliates held an equity stake of 34.43 per cent in Fortis at the end of December

Shares in Fortis Healthcare Ltd jumped as much as 24 per cent on Friday after main shareholders Malvinder Mohan Singh and Shivinder Mohan Singh resigned from the board saying it was in the interests of the company because of legal troubles they were facing.

In their resignation letter, the billionaire brothers cited a Delhi High Court verdict last week that upheld a 2016 order by a Singapore tribunal asking the brothers to pay damages worth Rs 25.63 billion ($398.34 million) to Japan's Daiichi Sankyo Co Ltd.

The letter was released as an exchange filing by Fortis late on Thursday. The Singh brothers and their affiliates held an equity stake of 34.43 per cent in Fortis at the end of December, according to a company filing to exchanges.

Daiichi bought control of Indian drugmaker Ranbaxy from a shareholder group led by the Singh brothers in 2008, and alleged in 2013 that former shareholders of Ranbaxy hid information about US regulatory probes into the company.

Once India's largest drugmaker, Ranbaxy was eventually sold by Daiichi to Sun Pharmaceutical Industries Ltd in 2014.

Although the Ranbaxy case is unrelated to Fortis Healthcare, the legal troubles enveloping the Singh brothers have been hitting shares of the healthcare company, among India's largest hospital operators.

Malvinder Mohan Singh served as Fortis Healthcare's Executive Chairman while Shivinder Mohan Singh served as non-executive vice chairman. The two brothers control a number of companies ranging from healthcare to finance.

"In light of the recent high court judgement, upholding the plea of Daiichi Sankyo to enforce the arbitration award, we believe this is in the interest of propriety and good governance," the brothers wrote in a resignation letter addressed to the board.

"It is intended to free the organisation from any encumbrances whatsoever that may be linked to the promoters."

A spokesman for RHC Holding Private Ltd, a holding company owned by the Singh brothers, said the brothers had no comment beyond the resignation letter released by Fortis.

A spokesman for Daiichi in Japan said the company would not comment on ongoing litigation.

A separate lawsuit filed by a New York-based investor at the Delhi high court in November accuses the Singh brothers of "diversion, siphoning and digression of assets" from financial firm Religare Enterprises Ltd.

Religare, whose single biggest shareholder are the Singh brothers and affiliates, has denied the allegations.

($1 = 64.3325 Indian rupees)