The race for Fortis is heating up as a TPG-backed Indian firm sweetened its initial offer, and IHH Healthcare proposed a bid of as much as $1.3 billion.
India’s second largest private hospital chain, Fortis Healthcare Ltd. has received a joint investment proposal from Hero Enterprise Investment Office and the Burman Family Office, intensifying a race to gain control of healthcare major.
The two Indian business families have made a binding offer to invest a total of 12.5 billion rupees ($192 million) through a preferential share allotment, according to a Fortis exchange filing on Thursday. The proposal, which is subject to certain conditions, includes an immediate investment of 5 billion rupees and 7.5 billion rupees after diligence is completed within three weeks.
The race for Fortis is heating up as a TPG-backed Indian firm sweetened its initial offer, and IHH Healthcare proposed a bid of as much as $1.3 billion, according to people with knowledge of the matter.
The competing proposals are the latest twist in the Fortis saga, with India’s fraud watchdog and stock regulator probing the company after Bloomberg News reported that its founders took at least 5 billion rupees out of the company without board approval.
“As the assets of Fortis are good, the company may get more competitive offers in the future,” said Sanjiv Bhasin, executive vice president for markets at brokerage India Infoline Ltd. “It has potential to move up to 175 rupees a share.”
The Hero and Burman group entities are shareholders of Fortis, with about a 3 percent stake in the hospital operator, according to the offer letter from the investors attached to the filing. The two entities said they are concerned about Fortis’s future and the company requires funding for its immediate needs as well as to develop its long-term value.
“Our offer is simple and does not envisage any changes to the current structure, operations, and assets of the company,” Sunil Kant Munjal of Hero Enterprise, and Mohit Burman of the Burman Family wrote in the letter. Its proposal “can be implemented in a fairly short period of time and will allow the company to focus on stabilizing operations and on growth,” they said.
Munjal is the chairman of Hero Enterprise and is president of Dayanand Medical College and Hospital in Ludhiana, in the northern Punjab state, which has more than 1,500 beds, according to the letter. The Burman family founded Dabur India Ltd., which sells consumer products from hair oil to packaged juices.
The two Indian groups had approached Fortis in March to discuss the possibility of a deal, though the talks were unsuccessful as the company’s management had said they didn’t have the time to offer an opportunity for due diligence, according to the letter.
They are entering the fray as founders Malvinder Singh and Shivinder Singh was unable to repay loans and lost Fortis shares put up as collateral. Both the brothers resigned from their posts at the company in February. Their stake in Fortis declined to less than 1 percent from 34.4 percent previously.