Fortis investors move SEBI over delay in IHH open offer, ask for interest: Report
New Delhi: Displeased with delay in an open offer to buy an additional stake, a few of the shareowners holding minor shares of Fortis Healthcare Ltd (FHL) have reportedly reached out to the country’s market regulator. According to a recent media report, a group of minority shareholders have urged the Securities and Exchange Board of India (SEBI) to issue directions to Malaysian firm IHH Healthcare Bhd to pay interest to shareholders for a delay in the open offer to buy an additional 26% stake in Fortis Healthcare.
The shareholders have requested SEBI to issue directions to IHH Healthcare to ensure the early continuation of the open offer tendering process, two people aware of the matter told Live Mint.
As per the shareholders, the claim for interest is justified as minority shareholders have been deprived of the open offer dues for a long time. They further held IHH Healthcare responsible for not taking adequate steps to become a party to the case for seeking restart of the open offer.
The offer was to open for subscription from 18 December till 1 January. However, IHH Healthcare could not proceed with the open offer following a Supreme Court’s order to put the transaction on hold, following a contempt plea moved by Japanese drug maker Daiichi Sankyo Co. Ltd against the Singh brothers, the former promoters of Fortis.
Medical Dialogues had earlier reported that the apex court had refused to pass any interim order on pleas relating to the sale of controlling stakes of Fortis Healthcare to Malaysian IHH Healthcare Berhad by former Ranbaxy promoters and hospital operators Malvinder and Shivinder Singh.
However, regulation 18 (11) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, says that the “acquirer shall be responsible to pursue all statutory approvals required by the acquirer in order to complete the open offer without any delay, neglect or delay".
The Supreme Court had in December put on hold the Fortis-IHH deal. Thereafter, the IHH, in its regulatory filing, said it will not be able to go ahead with the open offer for Fortis Healthcare for the time being. However, more than five months later the situation remains the same.
IHH chief executive officer Tan See Leng told reporters in March, “We at IHH fully respect and (have the) highest regard for the Indian judiciary process...we certainly, hope India will support foreign investors as well as minority shareholders in Fortis to have their chance to realise the value of their investment through this open offer, which till now has been delayed."
In the current scenario, shareholders hold that Sebi should protect the interest of investors. “As a regulator, Sebi can become a party to the case in the Supreme Court for the limited purpose of seeking resumption of the open offer so that shareholders are able to avail the much-delayed open offer opportunity," the first person mentioned above told Live Mint.
While Shriram Subramanian, founder and managing director of proxy firm InGovern Research said, “As the open offer process has been stopped by the Supreme Court itself, there may be a case for minority investors to seek compensation in the form of interest for the delay in the open offer process."
Sources told Live Mint that IHH Healthcare has acquired the hospital chain and has not done enough for shareholders to realize the value of their investment through the open offer.
In July 2018, IHH Healthcare won a bidding war to acquire Fortis and completed the deal in November, buying a 31.1% stake through preferential allotment of shares.