In a bid to create a war chest for expansion opportunities, hospital chain Fortis Healthcare is in advanced stages of finalising the pricing and other technicalities for a Rs 1,800 crore to Rs 2,000 crore rights and warrant issue.
A senior Fortis Healthcare executive said the company expects to conclude three acquisitions in the next couple of months, which may include majority stakes in hospitals and even land acquisition in strategic markets.
Sources close to the development said the rights issue would be between Rs 850 crore and Rs 1,000 crore at a 1:2 ratio. The warrant issue, to raise another Rs 800 crore, would be linked to the rights issue. A final decision on this will be approved by the end of this week.
The rights and warrant issue exceeds the company’s current market capitalisation of Rs 1,590 crore.
Despite the lacklustre state of the stockmarkets, sources said the rights would be priced at a premium to the market price of Rs 70.
Two recent large rights issues from Tata Motors and Hindalco devolved on the underwriters and promoters.
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Fortis Healthcare Managing Director Shivinder Mohan Singh, declined to comment on the issue, but said the company was “exploring various options of raising resources to fund its expansion plan”.
The company had mobilised Rs 496 crore in April 2007 through a public issue. The promoters currently own 74.4 per cent.
Fortis has 2,600 beds in 22 hospitals and wants to add 550 beds across the country, including 150 in Mumbai shortly.
The company is in talks with the Manipal Group for a 51 per cent stake.“There is still a gap between the asking price and offer price. The demand is for an enterprise value of around Rs 1,200 crore and Fortis is offering around Rs 900 crore,” sources close to the negotiation said.
Manipal Group intended to raise around Rs 500 crore through various routes, sources said, including an equity issue and private placement for which discussions had begun with ICICI Ventures and Bain Capital, among others. Rangarajan, group chief financial officer of Manipal Group, however, said no such discussions were on.
Fortis is also reportedly negotiating with Wockhardt Hospital for a 26 per cent strategic sake. “We are not looking at management control but long-term synergies between the two hospitals. Initial discussions have been held but it would be premature to talk on those issues,” said a senior Fortis executive.