TPG offers Rs 3000 crore for Fortis stake, Daiichi moves court

For acquiring controlling stake in Fortis Healthcare Ltd and in the merged entity of SRL Diagnostics and Fortis Malar Hospitals, an American investment company TPG capital has recently proposed a non-binding offer of Rs 3000 crores, two persons are aware about this have informed ET

TPG Capital is an American investment company, it is one of the largest private equity investment firms in the world, focused on leveraged buyouts, growth capital and leveraged recapitalization investments. TPG also manages investment funds specializing in growth capital, venture capital, public equity, and debt investments.

A person aware of the developments informed ET on the condition of anonymity, "TPG has offered to pay close to Rs 3,000 crore for a 26% primary stake in Fortis Healthcare which will be followed by an open offer. TPG has also offered to pay around Rs1,500 crore for a stake in SRL Diagnostics and Fortis Malar through a secondary sale (in which promoters will sell a large part of their holdings)."

TPG has proposed that the current promoters, Malvinder and Shivinder Mohan Singh who currently own 67.5% stake in Fortis Healthcare cede management control to the private equity fund, reports Mint.

Last year in August, the Fortis Healthcare had approved the demerger of diagnostics business, which consists of both its own centres and the 56.4% stake in SRL.

Another person aware of the development said, "The Singh brothers are likely to remain the single largest shareholder in Fortis Healthcare even after the open offer by TPG if the deal goes ahead. The modalities of how TPG will take control is being discussed and it may involve TPG getting special voting rights while Singh brothers continue only as financial investors."

On the other hand, speaking with Mint, a spokesperson from TPG India refused to say anything over the matter. A senior RHPL official who did not wish to be named, confirmed receiving a bid from TPG but maintained that discussions with TPG and a few other prospective buyers are currently underway and no final decision has been made.

In the past few months, many private equity funds have been in talks with Singh brothers to acquire a major controlling stake in Fortis Healthcare.

Read also: Global private equity fund in talks with Singh bros to buy FORTIS healthcare

"If the Singh brothers are able to sell their stake in SRL for Rs. 1,500 crore, it will bring their debt to serviceable levels, assuming they will use the proceeds to repay a part of their debt," said a person.

The Mint has also reports that, the Singh brothers who have also been in talks to refinance a large part of promoter debt with various lenders may not do so if the deal with TPG fructifies.

As of 31 March, RHPL had a net worth of around Rs. 6,900 crore and a debt of Rs. 4,064 crore. The firm's key source of funds is treasury income, earned from investments and trading in mutual funds and from inter-corporate loans provided to group companies. For 2015-16, RHPL reported a net profit of Rs. 73.6 crore, as against Rs. 91.08 crore in 2014-15. TPG is an active investor in the Indian healthcare industry. In 2016, TPG Growth, the $7 billion growth equity investment platform of TPG Capital, made two acquisitions of hospital chains in south India.

In last year July, TPG capital had acquired Rhea Healthcare Pvt. Ltd for $33 million and in April TPG Growth acquired a majority stake in Cancer Treatment Services International (CTSI). Similarly, the company has purchased a significant minority stake in Manipal Health Enterprises Pvt. Ltd for Rs. 900 crore.

Daiichi Moved to Delhi High Court

Meanwhile, Daiichi Sankyo India Pharma Pvt. Ltd. has moved to Delhi High Court to file an application against the Singh brothers to block them from selling their stake in Fortis Healthcare. Daiichi's move comes as the Singh brothers look to induct an investor in Fortis Healthcare.

In its application, Daiichi has objected to the sale, as it fears the move will lead to dilution in the assets which it seeks to recover as part of enforcement of the arbitration award, according to people aware of the development but not authorised to speak on record.

A person who has the knowledge of Development matter, requested for anonymity said, "Daiichi Sankyo's latest application requests the Delhi High Court to pass interim orders preventing the brothers and 18 other respondents in the case from selling or alienating their assets," reports ET

Moreover, the Daiichi has also demanded a guarantee from the concerned persons that the award amount Rs 2,562 crore plus interest is secure through measures like a bank guarantee or escrow, the persons said.

Speaking over the Daiichi demand, a spokesperson for RHC Holding Pvt Ltd said, "As the matter is sub judice, we cannot offer any comments."