IHH Healthcare to buy major stake in India hospital chain

March 14, 2018 | By | Reply More

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IHH, which operates the Parkway Pantai chain of hospitals, is preparing a war chest of RM3.9 billion to make the offer to Fortis shareholders, says report.

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KUALA LUMPUR: IHH Healthcare Bhd plans to make an open offer to buy shares in India’s Fortis Healthcare Ltd and is readying US$1 billion (RM3.9 billion) for this purpose, according to a report in India’s Economic Times (ET).

IHH has secured the services of investment bank Citi to advise on the process, the report quoted sources as saying, adding that talks had started with banks to tie up financing.

Fortis is the second largest hospital chain in India with over 5,000 beds, behind Apollo Hospitals with over 10,000 beds. The specialist hospitals are in various cities in India, including Delhi, Mumbai and Chennai.

IHH is eyeing acquisitions in India as it seeks further expansion into emerging markets where a growing middle class is boosting demand for private hospitals, according to the report.

IHH, the world’s second largest healthcare group, operates the Parkway Pantai chain of hospitals. It has 50 hospitals in 10 countries and earns its highest per-capita revenue in Singapore, where inpatients bring in an average of US$6,400 per admission.

Khazanah Nasional is the largest shareholder in IHH which has set aside RM3 billion to expand operations over the next three years.

According to the ET report, IHH is set to launch a voluntary open offer to buy the non-promoter shares of Fortis in the next few days, nine months after walking out of bilateral negotiations with promoters Malvinder and Shivinder Singh who were then in control of Fortis.

The ET report said the move would likely set the stage for competition with the TPG-Manipal Hospitals for a majority stake in Fortis. TPG, which has more than US$73 billion in assets under management, acquired about 25% in Manipal Health Enterprises Pvt Ltd, one of India’s largest private hospital groups, in 2015.

When ET contacted IHH, a spokesman said the company would not comment on market speculation and that it would update the market if there were any material developments.

The report said last June, IHH pulled out of exclusive negotiations on Fortis just days before signing on the dotted line, over concerns on the legal implications of a legal battle between Daiichi Sabkyo and the Singh brothers.

Parkway Pantai has a strong presence in India, which it considers its fourth largest market after Malaysia, Singapore and Turkey. It entered the country in 2015, buying a 51% stake in Hyderabad-based Continental Hospitals and 74% in Global Hospitals, also based in Hyderabad.

IHH’s net profit for the period ended December stood at US$25.88 million while quarterly revenue grew 10%.

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