IHH, TPG-backed Manipal Health Enterprises in last lap for Fortis buy

Munjal-Burman, KKR-backed Radiant exit the race

As the controversy around Fortis Healthcare unfolds, at least two prospective bidders stayed away from placing a final offer for acquiring a stake in the struggling hospital and diagnostics chain. 

Malaysia’s IHH Healthcare and private equity TPG-backed Manipal Health Enterprises have made fresh binding offers for Fortis. The Hero Enterprise Investment Office-Burman family office consortium and KKR-backed Radiant Life Care have, however, opted out, sources claimed. An e-mailed questionnaire sent to Fortis remained unanswered.

In a filing to stock exchanges, Fortis said it had received binding bids on July 3 that would be evaluated by the board in consultation with its advisors. The board meeting is likely in the next three days, when the final outcome will be announced. The Fortis stock gained about 7 per cent to close at Rs 142 on Tuesday.

Radiant Life Care and joint bidders Sunil Munjal-led Hero Enterprise and the Anand Burman-led Burman family office did not comment. Controversies surrounding fund diversion by ex-promoters, a tussle over the ownership of brand, and valuation could have played a part in two companies keeping out of the race.

Sources close to the Burmans said they were not willing to raise the bid as it would not be viable.

IHH notified the Malaysian stock exchange that it had placed a binding offer for Fortis. Sources close to the company claimed that IHH’s new offer was close to its previous bid, which valued Fortis at around Rs 175 a share. The exact price could not be known. 

Ranjan Pai-led Manipal Health, which has been pursuing Fortis for more than a year now, also placed a binding bid. In its May 14 offer for Fortis, Manipal had valued the company at Rs 180 a share, thereby valuing it at Rs 94 billion. In June, Fortis Healthcare, which is in the midst of a takeover battle since March this year, had shortlisted four of the five entities that had originally placed bids for the assets. 

The board had decided to include the Hero Enterprise Investment Office-Burman family office (Dabur) consortium, IHH Healthcare, Radiant Life Care backed by US private equity firm KKR, and the Manipal-TPG consortium in the bidding process.

The deadline for submitting bids was June 14, which was revised to June 28 and subsequently to July 3 owing to delay in announcing the fourth quarter and 2017-18 financial results.

The board had stated that the buyers were required to make a minimum investment of Rs 15 billion in Fortis by way of preferential allotment as well as having a plan for funding the acquisition of the RHT Health Trust assets (which owns the hospital assets of Fortis), and also offer an exit to the private equity investors.

Bids for the hospital chain were called afresh in May-end and the earlier process scrapped following investors' concerns.

An agreement to merge the Fortis group’s hospitals with Manipal Hospitals, signed at the end of March, and Hero-Burman’s Rs 18 billion investment offer in May were set aside owing to opposition from shareholders. 

RESOLUTION IN SIGHT

• Fortis initiated fresh bidding process in May
• Date for submission of bids was extended to 
• July 3 due to delay in approval of financial results
• Four bidders were in race but two of them have backed out
• Fortis board to meet in three days to decide on offers