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Fortis locked in Parkway war

Malaysian sovereign wealth fund Khazanah has launched an $835 million (Rs 3,841 cr), bid for control of Parkway Holdings, potentially pitting it against Fortis Healthcare in a battle for Singapore’s largest private healthcare provider.
By Harry Suhartono & Julie Goh | Reuters, Singapore
UPDATED ON MAY 27, 2010 10:23 PM IST

Malaysian sovereign wealth fund Khazanah has launched an $835 million (Rs 3,841 cr), bid for control of Parkway Holdings, potentially pitting it against Fortis Healthcare in a battle for Singapore’s largest private healthcare provider.

The surprise offer, which aims to lift Khazanah’s stake in Parkway to 51.5 per cent, could either trigger a takeover fight or force Fortis to cash out of the medical firm, which operates 16 hospitals in Singapore, Brunei, Malaysia, India and China.

Shares in Fortis, which had hoped to use Parkway as a springboard for expansion, ended 7.6 per cent higher, a sign that some investors expect billionaire Malvinder Singh, whose family controls Fortis, to sell out.

“Market is betting that they would be exiting at profit,” said Jagannadham Thunuguntla, equity head at SMC Capitals in New Delhi. “If Fortis wants to go ahead, then naturally they will have to write a big cheque.”

Others suggested Singh, who with his brother Shivinder has a fortune estimated by Forbes at $3 billion, may make its own offer.

“We think this potentially could be the start of a bidding war. Khazanah has the option of turning its partial offer to a full GO (general offer) should they choose to do so. Both parties have professed to be able to drive more value out of Parkway,” UBS analyst Jaj Singh wrote in a note on Thursday.

Khazanah’s offer comes just two months after Fortis bought a 23.9 per cent stake in Parkway from US buyout firm TPG for $685 million (Rs 3,151 cr).

Fortis’ stake has since risen to 25 per cent. It had said in March it had no immediate plans to raise its stake.

Singh, 37, stepped down as chairman of Religare Enterprises Ltd in April to focus on healthcare. He recently shifted his base from Delhi to Singapore, where he became chairman of Parkway.

Khazanah is offering S$3.78 a share to raise its stake from nearly 24 per cent, more than what Fortis paid in March, when its deal valued Parkway at S$3.56 a share. The deal would be Khazanah’s biggest acquisition outside Malaysia, according to Thomson Reuters data.

Spokeswomen for Fortis and Parkway had no immediate comments on Khazanah’s offer.

Khazanah holds a stake in Apollo Hospitals. Apollo shares ended 9.4 per cent higher.

The bid by Khazanah’s Integrated Healthcare unit is a 25 per cent premium over Parkway’s last traded price.

Khazanah plans to consolidate its stakes in Parkway, Pantai, Apollo and IMU to become Asia’s regional healthcare platform.

Checkmate or cheque mates? : Malvinder and Shivinder Singh

Khazanah offers $835 mn to up Parkway stake to 51.5%.
Offer comes 2 months after Fortis buys 23.9% for $685 mn.
Khazanah offers 25% premium over Parkway’s last price.
Fortis shares zoom 7% as investors bet on cash-rich exit.
Bidding war between Fortis and Khazanah a possibility.
Khazanah holds a stake in Apollo Hospitals also.
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