Fortis Global Healthcare today acquired a 28.6 per cent stake in Lanka Hospitals Corporation from an industrial conglomerate, Distilleries Company of Sri Lanka, for Rs 162 crore (397.55 crore Sri Lankan rupees).
The Lanka Hospitals Corporation, majority owned by a government firm, Sri Lanka Insurance Corporation Ltd, runs a 350-bed hospital in Colombo. The company plans to expand its presence in the island nation. The deal — sale of 64.1 million shares at 62 Sri Lankan rupees per share — has come five years after Apollo Hospitals, India’s largest private healthcare provider, exited Sri Lanka by selling its significant minority shareholding in the same company.
Apollo had sold 52 million shares it owned in Lanka Hospitals in 2006 for about half the price paid by Fortis, though it retained its brand franchise agreement and technical support for some more years.
Fortis Global is the Singapore-based overseas investment arm of the promoters of India’s second-largest private healthcare provider — Fortis Healthcare Ltd.
“Lanka Hospitals is the first step for Fortis Global to build its healthcare business interest in one of the fastest-growing economies in Asia. It is one of the most advanced and comprehensive healthcare facilities in Sri Lanka. We believe there are tremendous opportunities for the hospital’s expansion and we will support the company’s management in realising such growth,” Fortis Global Executive Chairman Malvinder Mohan Singh said.
Incidentally, Lanka Hospital’s 2009 Annual Report says the reason to discontinue its brand association with Apollo was that “the brand had fewer positives in the local market where perceptions of high cost, non-Sri Lankan identity and being less in tune with local healthcare needs existed”.The Lanka Hospital spokesperson was not available for comments.
Under Sri Lankan rules, acquisition of 30 per cent of the voting rights will trigger an open offer for the balance shares. The current investment is the fourth for Fortis Global in five months. It had acquired the largest private primary care company in Hong Kong, invested in the largest dental care company in Australia and announced the acquisition of a cancer speciality hospital project in Singapore during this period.