The tough negotiations to acquire 10 hospitals from Wockhardt establish the Fortis MD’s hunger for expansion.
Last week, Bolt set new world record in the 100 and 200 metre sprints, besting his previous performance in both events by fractions of a second. On August 24 the Fortis managing director scripted India’s largest acquisition in the healthcare space, bettering his 2005 record by Rs 259 crore.
Fortis’ Rs 909-crore deal to acquire eight profit-making hospitals and two greenfield projects from rival healthcare chain Wockhardt outstrips the Rs 650-crore deal to buy Delhi’s famed Escorts Hospital four years ago.
But Singh differed from “Lightning Bolt” in the time he took to set his new record. Where Bolt took about a year, Singh took eight months.
This is no small achievement given the odds he was up against. The properties his company acquired, which account for about 85 per cent of Mumbai-based Wockhardt Hospitals’ turnover, were considered the hottest healthcare assets on the block in the country. Not surprisingly, several groups, including India’s largest private hospital chain Apollo, were keenly interested, so closing the deal entailed some intense negotiation.
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Singh had good reason to work hard for these assets from debt-burdened Wockhardt. The deal will turn Fortis into a tough competitor with a total bed strength of 5,180 to Apollo with over 7,000 beds. As importantly, the acquisition marks out Fortis as a pan-India player — of the 10 hospitals, two are in Mumbai, five in Bangalore and three in Kolkata.
For Singh, the younger scion of the erstwhile promoters of India’s largest drug firm Ranbaxy (now owned by Japan’s Daiichi Sankyo), the deal is the fulfilment of his father, the late Parvinder Singh’s ambition to set up a world-class integrated healthcare delivery system in the country. Parvinder, who was largely credited with turning Ranbaxy into a world-class entity, set up the first Fortis hospital at Mohali 10 years ago.
Although his elder brother Malvinder Mohan Singh remains chairman of the Fortis group, it is the younger Singh, a management graduate in healthcare from the Duke University, USA, who calls the shots within their ever-expanding healthcare empire.
The Wockhardt deal is, in fact, just one in a series of acquisitions and expansions that Singh has negotiated. In the last four years, the company had acquired a hospital in Chennai and invested in a Mauritius hospital project. It also signed management contracts with hospitals across the country.
An alumnus of the tony Doon School and an honours graduate in mathematics from St. Stephens College, Delhi, Singh seldom gets his math wrong. The Wockhardt deal is expected to be EPS accretive from the very first year. The deal, analysts say, is a steal; Fortis would have had to pay double the amount if it were to set up similar facilities from scratch.
Fortis intends to raise Rs 1,000 crore through a rights issue for future acquisitions and expansions. Part of the funds raised from the rights issue will go into funding the acquisition.
Singh, who joined his family promoted Fortis as executive assistant to the chairman in 2000, worked through as its project leader, chief operating officer, director - projects and joint managing director, before becoming group managing director in 2006.
The road from Mohali to Mumbai has seen Singh take Fortis beyond the confines of north India. Fortis has the largest corporate healthcare network in states like Delhi, Maharashtra, Karnataka, Punjab, Haryana, Rajasthan and Uttar Pradesh.
Back home, Singh is now revisiting the growth targets for his healthcare empire. Wockhardt’s acquisition has meant that Fortis’ 2012 target of reaching 6,000 beds and revenues of $1 billion (around Rs 5,000 crore) are clearly achievable. But it’s a fair bet that Singh’s healthy appetite for growth has not abated.