Exclusive | TPG still eyeing Fortis but in wait-and-watch mode with ongoing investigation at company: Sources

By Viswanath Pilla

Viswanath Pilla Moneycontrol News
US-based private equity investor TPG Capital is looking at a possible acquisition of India’s second largest drug maker Fortis Healthcare, but awaits more clarity on the pending investigation at Fortis and the ongoing litigation between Singh brothers and Japanese drug maker Daiichi Sankyo over the Rs 3,500-crore arbitration award, sources told Moneycontrol.

TPG declined to comment.

DNA, last week quoting sources, reported that TPG Capital-backed Manipal Health Enterprises (MHE) is close to buying out Fortis and the deal, expected to be around Rs 6,500 crore, is likely to be formalised this week.

An email and message sent to Ranjan Pai, Chief Executive and MD of Manipal Education and Medical Group (MEMG) that operates Manipal Hospitals remained unanswered at the time of publishing this story.

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Fortis spokesperson said he isn’t aware of any such developments referring to the M&A talks.

TPG is one of the largest PE investors in Indian healthcare with investments in Manipal Hospitals, Healthium Medtech (formerly known as Sutures India), single specialty chains Motherhood and Cancer Treatment Services International (CTSI).

To be sure, this isn’t the first time that TPG is in news for Fortis acquisition, the PE investor was on and off the deal table for Fortis buyout for at least three times in last three years. The deal couldn’t be pulled off for reasons such as valuations and ongoing litigation.

TPG name has also started buzzing as Vishal Bali, the ex-Fortis group CEO is now the Asia head for healthcare vertical at TPG Growth that invests in growth equity and middle-market buyout opportunities.

Malaysia-based IHH, the world’s second-largest healthcare group which operates the Parkway Pantai chain of hospitals, was also widely mentioned in news reports for possible acquisition of Fortis.

IHH dismissed such reports.

“IHH is not, nor is it close to, concluding any negotiations or due diligence or transactions in India at this point in time," said the company in a regulatory filing to the Singapore and Malaysian stock exchanges in January.

The lenders have emerged as major stakeholders of Fortis after they invoked shares pledged by Fortis promoters following Supreme Court order

The promoter holding has come down to 0.8 percent from 34 percent in December 17 due to invocation of pledged shares by lenders, now lenders account for around 41 percent of Fortis shareholding.

Yes Bank with 17 percent and Axis Bank 6-7 percent now hold the keys for any talks related to strategic sale of Fortis.

“As a matter of policy, Yes Bank does not comment on client specific information,” Yes Bank said in a email statement to Moneycontrol.

Axis Bank is yet to respond to Moneycontrol queries at the time of publishing.

An executive of a bank that is one among the lenders that invoked shares said on condition of anonymity that “it’s a dynamic situation” and we are waiting for the internal investigation report.

Fortis spokesperson said though there is no timeline for the external law firm to submit its report, but it will do it “as soon as possible.”

Fortis has appointed law firm Luthra & Luthra in to investigate into the allegations of promoters Singh brothers taking-out Rs 473 crore from the company through questionable inter-corporate deposits.