IHH Healthcare Berhad is in talks with the Securities and Exchange Board of India (SEBI) to revive a stalled open offer to public shareholders of Fortis Healthcare Ltd, said its Managing Director and CEO Kelvin Loh.
The Malaysian company would like to do this “as soon as possible,” Loh said in an interview with Moneycontrol.
"I would say I hope this year so Fortis can carry on with its plans," said Ravi Rajagopal, Chairman of Fortis Healthcare.
In November 2018, Fortis had made a preferential offer amounting to 31 percent of its equity base to IHH for Rs 4,000 crore. IHH had also earmarked around Rs 3,000 crore to make an open offer to the public shareholders of Fortis as mandated by Indian law. However, the open offer could not go through since the Supreme Court paused it in December 2018 after Japanese firm Daiichi Sankyo moved the apex judicial body accusing the Singh brothers, erstwhile promoters of Fortis, of diverting funds to avoid paying it an arbitration award.
In September 2022, the Supreme Court passed final orders in the case sentencing the Singh brothers to six months in jail each for contempt of court. It also asked the Delhi high court which is hearing a related case to consider a forensic audit of transactions between Fortis Healthcare and RHT Trust, a firm associated with the Singh brothers. Fortis had used the money from IHH to buy assets of RHT, which is listed in Singapore. However, the apex court made no mention of the freeze on the IHH-Fortis deal.
The Supreme Court has disposed of all the cases and there is “no order pending against IHH and Fortis,” said Loh.
Loh said there was no requirement to change the offer price which was fixed at Rs 170 per share when IHH signed the deal with Fortis in 2018. Fortis shares ended the day 1.84 percent up at Rs 287.30 on BSE.
According to Rajagopal, as a matter of deference to authorities and extreme caution, IHH is informing SEBI that they would like to proceed ahead with the mandatory tender offer (MTO).
“SEBI themselves had impleaded in the SC (a couple of years back) saying that it (MTO) should be allowed. So IHH is reminding the authorities that both are on the same side and want to complete the process,” he said.
“It’s a different matter that the share price that time was Rs 170 and now it is Rs 287.30 so anybody can guess what the outcome is going to be,” Rajagopal also said.
Rajagopal said that before the hospital chain completed the transaction with IHH, it made sure that the earlier promoters, the Singhs, no longer had association with the RHT. “We did due diligence, satisfied ourselves and then proceeded ahead," he said.
He also added that Fortis is looking forward for IHH to become 51 percent plus shareholder.
Fortis is looking to add 1,000 more beds in the next three years and expand its diagnostic wing, apart from other services, said Loh.
The plans for the hospital chain include strengthening its existing centres in Delhi-NCR and other metros and also acquiring centres beyond tier-I cities over the next few years.
(This story has been amended since first published to correct Ravi Rajagopal's statement on the timing of the open offer.)
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