Fortis Healthcare to sell stake in Singapore listed Rs 4650 crore RHT Trust

New Delhi: A couple and a month after acquiring the assets of Religare Health Trust (RHT) for Rs 4650 crore, Fortis Healthcare Ltd. (FHL) has now initiated talks with potential buyers to sell its stake in Singapore listed RHT. According to recent media reports, the sale proceeds are likely to be put back into the Fortis business in India in order to make it more successful.

Earlier this month Medical Dialogues had reported that Fortis Healthcare completed the acquisition of RHT Health Trust (RHT) assets. Fortis had entered into definitive agreements with RHT to acquire the entire portfolio of assets of the Singapore-listed entity for an enterprise value of Rs 4,650 crore.

Also Read: Fortis completes acquisition of RHT assets at an enterprise value of Rs 4650 crore

Presently, in an exchange notification, FHL has said Fortis Healthcare International and Stellant Capital Advisory Services are in preliminary discussions for the sale. No firm proposal has been received yet, it added.

“RHT Health Trust Manager Pte. Ltd (in its capacity as trustee-manager of RHT Health Trust (RHT) wishes to inform unitholders of RHT that it has been notified by Fortis Healthcare International Ltd (FHIL), a controlling unitholder of RHT, and Stellant Capital Advisory Services Pvt. Ltd, the sole shareholder of the trustee-manager, that they have each commenced discussions with various parties to explore the possibility of a sale of their interests in RHT and the trustee-manager, respectively," Fortis Healthcare International, a unit of FHL, said in a regulatory filing.

This process has begun after the buyback of the hospital assets from RHT Health Trust earlier this year. Fortis said funds raised via selling the stakes would be utilised for business requisites.

It is learnt through media reports that with the Singh brothers exiting their stake in RHT Health Trust on paper in 2017 there would be no obstruction as far as the sale of RHT's stake held by Fortis Healthcare's two subsidiaries is concerned.

However, it is unclear if they still hold beneficiary shareholding in the company as the same need not be disclosed according to Singapore laws.

FHL told Business Standard, “Upon completion of the securities acquisition, the service fees that Fortis was paying would be completely eliminated thereby improving its operating profitability .i.e. Ebitda and cash flows. With Fortis’s completion of the proposed transaction; the cumulative expected incremental positive impact on Ebitda would be about Rs 270 crore (basis FY18 net fees).”

The proposed transaction will help raise funds to fulfil the needs of FHL as its acquisition by Malaysia's IHH Healthcare Ltd is in limbo.

A Fortis spokesperson told Live Mint that the divestment would “enhance" value for all its stakeholders. “With the unwinding of the current structure, it would also make it easier for investors and other stakeholders to better understand the company’s business and financial performance."

"Even as the value from the transaction is nominal and is not going to change fortunes, it will simplify the structure," two people aware of the developments told the daily.

Fortis has an aggregate interest in 27.82% of the units in RHT, comprising 25.14% held by FHIL and 2.68% held by the trustee-manager, a unit of Stellant. FHIL and Stellant are wholly-owned subsidiaries of FHL.