Two Private Equity Giants join hands to take Over Fortis Healthcare, SRL

MUMBAI: Private equity firms TPG capital, an American investment company and General Atlantic (GA) are reported to have come together for acquiring the controlling stake in Fortis Healthcare.

Four people aware of the development informed ET about the same that if the deal goes through, it will also involve the purchase of the diagnostics arm SRL.

The promoters of Fortis healthcare Malvinder and Shivinder Singh currently hold 52.3% in Fortis, according to stock exchange notifications. Of this, 85.6% is reported to be pledged. The company’s market cap stands at Rs 11,446 crore.

Medical Dialogues team had earlier reported that along with General Atlantic (GA), four three US funds KKR and Co. Lp, TPG Capital ,Bain Capital, IHH Healthcare were in the race for acquiring stake in Fortis Healthcare as Fortis, India’s second-largest hospital operator.

Read also: 5 Companies in the run to Aquire Fortis Healthcare

It is also reported that IHH Healthcare, Asia’s largest healthcare group, is the other serious contender in the fray.

It was reported that for acquiring controlling stake in Fortis Healthcare Ltd and in the merged entity of SRL Diagnostics and Fortis Malar Hospitals, TPG capital had proposed a non-binding offer of Rs 3000 crores.

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

With a control premium, the deal could value Fortis at around Rs 12,000 crore. Moreover, SRL could be valued at Rs 4,500-5,000 crore, said the officials. The promoters are working towards demerger of SRL as well

The promoters will reportedly dilute a minimum 26% and cede management control. The acquisition is likely to trigger an open offer for an additional 25% equity. If a deal gets consummated prior to the reorganisation, then the rejig may not go through, said officials in the know told Economic times on condition of anonymity as the talks are still in private domain.

Speaking with ET, a spokesperson RHC Holding Pvt Ltd, one of the promoter holding companies of Fortis, said, “We cannot comment on market speculation."

“The PE consortium and IHH are the strongest to close the deal. KKR is a notch below them, followed by Bain. All sides are looking to make a formal announcement by the month-end. The new investors will be the largest shareholder in the target entities,” officials privy to the deal informed.

“It will be a combination of primary and secondary share sale. The final structure of the transaction is still being worked out. The promoters have been keen on demerging SRL. The negotiations should conclude by this month end."

“It’s a large cheque, so the two PE funds are looking to team up and co-invest. They have been working for the longest time on this transaction.”