New Delhi/Singapore: India’s Fortis Healthcare has hired Macquarie and Religare Capital to raise funds for a possible battle with Malaysian sovereign wealth fund Khazanah over Singapore’s Parkway Holdings, two sources with knowledge of the matter said.
Fortis, controlled by billionaire brothers Malvinder Singh and Shivinder Singh, is also in talks to hire RBS to help raise funds, said the sources, who declined to be identified as the matter is not yet public.
Fortis Healthcare, which owns roughly 25% of Parkway, had wanted to build a controlling stake in the firm before Khazanah made a surprise $835 million offer to lift its stake to 51.5%.
Parkway operates 16 hospitals in Singapore, Brunei, Malaysia, India and China.
Under Singapore rules, Fortis will have to make a general offer for Parkway shares it does not own or a potential bid of more than $2.3 billion because it recently bought Parkway shares.
Last week, Fortis unveiled plans to raise as much as $1.2 billion in equity and debt.
“All these steps indicate Fortis is very aggressive about Parkway and is working towards arranging funds within the limited timeframe for the counterbid,” said Sapna Jhawar, an analyst with Mumbai-based brokerage Sharekhan.
Fortis will have to offer a 6-10% premium over Khazanah’s offer to attract shareholders, analysts said.
Khazanah is offering S$3.78 a share to double its stake in Parkway, valuing the entire company at S$4.27 billion ($3.06 billion).
Malvinder Singh moved from New Delhi to Singapore as chairman of Parkway, a hospital chain he planned to use as a platform for global expansion.
Citings its television channel ET Now, India’s Economic Times newspaper reported on Tuesday that a consortium of banks were willing to fund up to $1 billion.
Sources told Reuters that the banks’ mandate was to arrange debt and they are not involved in Fortis’ equity raising plans.
Fortis, Macquarie, RBS and Religare declined comment.
Parkway’s shares, down 0.3 percent at midday, have weakened in the past two sessions after staying above Khazanah’s offer price for the past few days on market talk of a likely counter-bid by Fortis. Fortis shares were up 0.1% by 11:45am.
A fund linked to Morgan Stanley recently bought Parkway shares for its clients above Khazanah’s offer price, fuelling speculation about a counter offer.
Morgan Stanley is also the independent financial adviser to Parkway. Deutsche Bank is advising Khazanah.
But not everyone is convinced Fortis will make a counter bid.
“While we do not rule out a potential counter-bid offer, we maintain that Fortis would be hesitant to launch an outright general offer, given current valuation and the capital outlay involved,” Su Tye Chua, a Singapore-based analyst at Credit Suisse said in a note on Tuesday.
The note said if Fortis gains control of Parkway through a potentially successful offer, it may cloud the Singapore company’s long-term strategy for the Malaysian market.
Parkway’s Malaysian operations, through a 40:60 stake with Khazanah in Pantai, currently generates about a quarter of Parkway’s revenues and almost a-third of its earnings before interest, tax, depreciation, amortisation and rent (EBITDAR).