Fortis Healthcare, one of the leading player in the healthcare sector, has decided to raise Rs 1,800 crore through issue of fresh shares and warrants on rights basis to the existing shareholders. This includes Rs 1,000 crore from rights issue of equity shares.
The company has not decided the ratio of rights issue and its share price. The pricing would be decided at the time of the issue. “However, it would be above the current market price,” said Yogesh Sareen, chief financial officer, Fortis Healthcare. He added that, “the details of warrants issue, including the size or ratio, would be decided at the time of the issue.”
“It generally takes 150-180 days for things to finalise. By February, we expect the details of rights issue to be finalised and if all goes well, the issue should be closed by June," Sareen said. Under the new norms, the pricing of the warrants needs to be done at the time of the issue, he added.
Since promoters are underwriting the proposed issue of shares and warrants, it would help them to increase their holding to close to 90 per cent from the present level of 68 per cent. Given the current market sentiments and investors’ risk aversion, it is unlikely that the proposed right would receive investors' response, said a leading banker.
“Since the issue is going to be priced above the current market price, it is all the more reason for the investors to not participate in the proposed issue,” he added.
The proceeds of the rights issue would be used primarily for funding projects including the upcoming Medi-City project in Gurgaon, redemption of preference shares, repayment of short term debts, upgradation of existing facilities and tapping future investment opportunities, the company said. Besides the green field projects, the company is looking at various opportunities for acquisition. On the issue of Manipal Hospital, Sareen said that they are not in the negotiation.
“At any point of time, we are in discussions with various companies. But we are not discussing anything with Manipal Hospital,” he added.
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Fortis Healthcare CEO and Managing Director Shivinder Mohan Singh said, “We have fine-tuned our operating model and are ready for aggressive growth over the next few years. The rights issue will enable us to restructure our balance sheet and set the base for a healthy future."
Besides, Fortis is also planning to bring down its debt and restructure preference shares capital on its balance sheet.