Fortis Healthcare Ltd today announced plans to raise Rs 2,750 crore from the securities market and secured its board’s approval to raise the borrowing limit to Rs 6,000 crore.
The move assumes significance, as Fortis is facing a likely challenge to its management control in Singapore’s Parkway Holdings from Malaysian investment company Khazanah. The latter had proposed a partial offer to acquire a 51 per cent stake in Parkway – Asia’s biggest healthcare provider – last month.
While Fortis did not give any reason for its fund-raising plans, analysts said the company was preparing for a counter-bid. “Since Khazanah offered to buy Parkway shares at S$3.78 a share, the counter-offer will have to be nearly S$4 to make it attractive,” HDFC Securities Vice-President (Institutional Research) Ranjit Kapadia said.
Kapadia also pointed out that unlike Khazanah, which had been an investor in Parkway for years, Fortis – which acquired 25 per cent in Parkway in March – could not announce a counter offer that was partial before it completed six months.
“Under Singapore rules, Fortis may have to make an offer to purchase all shares of Parkway, as it hasn’t completed six months since the first acquisition. In that case, it may require more funds.” Analysts expect Khazanah’s open offer to start within two weeks, but are not sure of its success, as Parkway share prices on the Singapore Stock Exchange are very close to the open offer price.
While Khazanah’s offer was to gain 51.5 per cent stake in Parkway by buying 313 million shares at S$3.78 (around Rs 126) a share, Parkway shares closed at almost the same price (S$3.77) today.
Fortis is expecting to get shareholders’ approval for its fund-raising plans in 30-45 days. The company did not specify how or when it intends to raise the funds.
Fortis shares were marginally up and closed at Rs 140.4 on the Bombay Stock Exchange today. Fortis became the largest shareholder in Parkway after it acquired a 23.9 per cent stake in Parkway for S$959 million (around Rs 3,000 crore) in May. The company increased its stake to 25.3 per cent through open market purchase of shares later. Khazanah owns 23.32 percent stake and is the second biggest shareholder in Parkway.
