The Singapore government’s investment fund, GIC Special Investments Pte Ltd, has deferred its plan to invest about Rs 380 crore to pick up a minority stake in Fortis Healthcare.
The move comes when Fortis is exploring options to retain management control in Parkway Holdings, the Singapore-based company that runs Asia’s largest hospital chain network. The Malaysian government investment firm, Khazanah Nasional Berhad, the second largest shareholder in Parkway, has made a partial offer to acquire 51.5 per cent stake in the latter.
Fortis, promoted by the billionaire brothers Malvinder and Shivinder Singh, said today that GIC’s decision to defer investment in their company was “mutual”, as GIC wanted to evaluate the prospects of being part of a larger fund raising plan of Fortis.
Fortis had, on June 9, taken an enabling resolution to raise up to Rs 8,750 crore in debt and equity if required. Industry analysts had seen this as Fortis’ plans to raise funds for a counter-bid to Khazanah’s offer.
“The GIC decision has left Fortis with a shortfall of about Rs 400 crore in cash, as the amount was expected to come as equity. The debt-equity ratio will go up now,” said Ranjit Kapadia, VP, institutional research, HDFC Securities.
According to Kapadia, GIC could have decided not to pay the 11 per cent premium on the current share price of Fortis, as the investment company had agreed to purchase 22.3 million shares for Rs 170 a share, while Fortis shares closed at Rs 153.55 on the Bombay Stock Exchange today.
Fortis, however, said the development would make for better strategy. “GIC remains committed to Fortis. They have substantial investment in convertible bonds issued by Fortis. Like any other major investor, they constantly review their investments and have decided to participate in the larger fund- raise by the company at a strategic level. Therefore, they would like defer the current preferential investment until such time,” said Fortis in a statement.
Offer on Parkway
Meanwhile, Fortis is known to be trying for an exemption from Singapore rules that say any investor who has taken a minority stake in a Singapore Stock Exchange-listed company will, in less than six months, have to make an offer to acquire the complete shares of a company if it wants to try for a majority control. Fortis wants to acquire 51 per cent in Parkway, but is trying to avoid the compulsory provision to make an open offer for 100 per cent stake, industry experts said.
For a complete offer, Fortis may have to spend about $2.6 billion (Rs 10,000 crore). It declined to comment on this.
Parkway shareholders have time till July 8 to accept Khazanah’s partial offer, while Singapore Securities’ regulator has given time till July 30 for Fortis to declare its intentions for an alternative bid for Parkway.
Fortis became the largest shareholder in Parkway after it acquired 23.9 per cent in it for S$959 million (Rs 3,000 crore) in March. The company increased its stake to 25.3 per cent through a later open market purchase of shares. Khazanah owns 23.32 percent stake and is the second biggest shareholder in Parkway.
