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Race for Fortis hospitals heats up as Munjal, Burman families offer to invest Rs 1,250 crore

The Munjal and Burman families’ offer is the latest twist in the Fortis saga, after the TPG-Manipal consortium sweetened its initial offer, and IHH Healthcare Bhd. proposed a bid of as much as $1.3 billion for its hospital business.

business Updated: Apr 13, 2018 12:18 IST
P R Sanjai
P R Sanjai
Bloomberg
Fortis hospitals,Fortis Healthcare,Fortis sale
Sunil Kant Munjal is the chairman of Hero Enterprise, and president of Dayanand Medical College and Hospital in Ludhiana, in the northern Punjab state, which has more than 1,500 beds.(PTI Photo)

Fortis Healthcare Ltd. said it has received a joint investment proposal from two Indian business families, intensifying a race to gain control of the country’s second-largest private hospital chain.

Hero Enterprise Investment Office and the Burman Family Office have made a binding offer to invest a total of Rs 1,250 crore ($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 Rs 500 crore and Rs 750 crore 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 Bhd. proposed a bid of as much as $1.3 billion, according to people with knowledge of the matter.

| Read: IHH plans up to $1.3 billion bid for Fortis after TPG-Manipal revises offer

The competing proposals are the latest twist in the Fortis saga.

Fortis shares were little changed at Rs 154.10 as of 11.47 am on the National Stock Exchange (NSE) and have climbed more than 20% so far this month.

“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 Rs 175 a share.”

‘Simple offer’

The Hero and Burman group entities are shareholders of Fortis, with about a 3% 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 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 were 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% from 34.4% previously.

First Published: Apr 13, 2018 12:17 IST