As a face-saver, the Board of Fortis Healthcare this past week has decided to appoint a three-member advisory committee headed by Deepak Kapoor, former Chairman and CEO of PwC India to evaluate the bids and recommend the best offer.
The Board named Renuka Ramnath, founder of Multiples Alternate Asset Management and former MD & CEO of ICICI Venture and Lalit Bhasin, President, Society of Indian Law Firms & Managing Partner, Bhasin & Co., as members of the advisory committee apart from Kapoor.
The committee to be assisted by Standard Chartered Bank will meet on April 25 to assess the "binding offers", and make a final recommendation to the Board - which is scheduled to meet the next day.
With Radiant Life Care joining the fray on Friday - Fortis now has five offers on table, of which Manipal-TPG and Munjal-Burmans offers are binding.
Fortis Board also named Rohit Bhasin as the new director.
Bhasin, 58 is a chartered accountant - worked in senior roles in organisations such as Standard Chartered Bank, AIG and PricewaterhouseCoopers (PwC). He was a senior partner in the Deals Practice of PwC and India Head of the Valuation and Strategy team.
The appointment of advisory committee and induction of Basin on the Board is expected to bring some semblance to the Board that is expected to take a final decision this week.
The Board is under pressure with some prominent shareholders and corporate governance experts raising questions on credibility of the board - that consisted of members associated with Singh brothers - the erstwhile promoters of the company.
Singh brothers now own less than 1 percent stake in the company.
Billionaire investor Rakesh Jhunjhunwala earlier questioned the "sanctity of the deal" approved by board of directors appointed by shareholders who are no longer shareholders of the company.
Last week East Bridge Capital and National Westminster Bank Plc as Trustee of The Jupiter India Fund issued special notice to the healthcare provider seeking removal of all the directors on the Board.
The two investors for this purpose - called for an extra-ordinary general meeting (EGM) of Fortis Healthcare shareholders.
East Bridge and National Westminster Bank As Trustee Of The Jupiter India Fund together hold 12.04 percent stake in the Fortis.
The two investors have proposed three names for independent directors on the Fortis Board - Suvalaxmi Chakraborty, Chief Executive Officer (India) at State Bank of Mauritius, Ravi Rajagopal, Finance Director, Diageo and Indrajit Banerjee, management consultant.
Fortis Board said it has directed the management to organize the EGM at the earliest possible post completion of all administrative formalities.
Even corporate governance experts have suggested Fortis to appoint special committee to assist the Board in assessing the bid without waiting for changes to the board - that could take time.
“To evaluate bids, shareholders need more credence at the board-level: all four members of the current board have been associated with either the Fortis group, Religare group, or Ranbaxy for long tenures in the past,” proxy advisory firm IiAS.
IiAS said it believes the current board can get additional support in assessing the bids and coming to a decision among the complex sets of pulls and pressures, without necessarily waiting for board expansion.
"Considering that their credibility has been questioned, any decision the board takes, pertaining to the selection of the proposal, would have been questioned by the minority shareholders," said brokerage firm IIFL responding to the Board's decision.
"The formation of committee now cools off some pressure and it also gives some time for other non participating bidders to ready their bid. The bidders, who have already put forth their proposals, can also make the best of this time by offering the best, as the deal now goes in the hands of the independent evaluator," IIFL added.
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