Banks to fund Parkway acquisition; ICICI not part of deal

Country's leading banks are lining up to fund the $2.3 billion acquisition of the Singapore-based hospital chain Parkway Holdings by Fortis Healthcare, though ICICI Bank is not part of the arrangement.

The funds for financing acquisition are being organised by an Axis Bank-led consortium possibly including State Bank of India, Bank of Baroda, Bank of India, besides four to five foreign lenders. Though there was no official word.

Sources close to ICICI Bank said the bank was not part of the consortium for funding the Parkway Holdings acquisition. The bank's spokesperson, when contacted, declined to comment on the deal.

The consortium, according to banking sources, would include about 10 to 12 banks as about Rs 11,000 crore would be needed to fund the mega acquisition.

According to the offer made by Fortis early this month, the company will pay $2.3 billion (around Rs 11,000 crore) to acquire the remaining stake in Parkway Holdings if the deal goes through. Fortis, owned by billionaire brothers Malvinder Singh and Shivinder Singh, owns 25.3 per cent of Parkway.

The general offer to acquire all the shares of Parkway was made at 3.8 Singapore dollars per unit against the SGD 3.7 per share offer made by Malaysian sovereign fund Khazanah's arm International Healthcare Holdings , in May.

Of the $2.3 billion, Fortis is looking at raising around $ 1 billion to $1.5 billion through bank loans if it wins the acquisition bid, but there is a possibility of this amount going up, sources said.

Interestingly, IDBI Bank, which was earlier keen to part-fund the deal, is understood to have backed out from the consortium. When contacted, an IDBI Bank official said the bank "is no longer part of the Fortis-Parkway deal owing to some internal technical problems."

The initial funding of the deal is likely to be done through a short-term rupee-US $ loan carrying 12 months' maturity, but after this, Fortis may arrange long-term funding, sources added.

Fortis Healthcare on Thursday said its offer to acquire Parkway will close on August 12.

Fortis, which is up against an $835 million partial offer from Khazanah to pick up a controlling stake in Parkway, on Thursday dispatched the documents for its voluntary cash offer document to shareholders of Parkway.

On July 9, Khazanah extended its partial offer for taking control of Parkway to July 26, in a bid to buy more time.

The Fortis offer is being made by Royal Bank of Scotland and Macquarie Capital Singapore on behalf of RHC Healthcare, in which the Singhs hold a 51 per cent stake and the remaining 49 per cent is owned by Fortis Healthcare.