Mumbai/New Delhi: India’s second largest hospital chain, Fortis Healthcare (India) Ltd, will buy Singapore-based Fortis Healthcare International Pte Ltd owned by its promoters for $665 million (Rs 3,265.15 crore).
The valuation was made by an independent committee, the company said in a statement on Tuesday.
The Delhi-based hospital chain is expected to complete the acquisition by the end of the year. Fortis Healthcare (India) had announced the acquisition in September.
Shivinder Mohan Singh, Group Managing Director, Fortis Healthcare Limited, New Delhi. By Madhu Kapparath
Founders Malvinder and Shivinder Singh, who hold an 81.41% stake in Fortis Healthcare (India), own Fortis Healthcare International through a holding company, RHC Financial Services (Mauritius) Ltd. This was floated in 2009 with an aim to acquire healthcare assets abroad. RHC has acquired seven small and medium hospitals and related properties in South-East Asian countries.
It was not immediately known what premium the promoters have earned on the valuation of Fortis Healthcare International, since the asset base of the privately held company and its value were not disclosed.
In September, an analyst with a foreign brokerage, who didn’t want to be named, had said he expected the valuation to be “a fancy one, going by the valuation that the promoter group put on the stake in unlisted Super Religare Laboratories (SRL), which was sold to Fortis India”. The SRL stake was valued at Rs 930 crore.
The independent committee had originally put the value of the Fortis Healthcare International deal at $695.7 million, whereas the promoters had agreed to a value of $665 million, the company said in its statement.
After a merger, the combined entity, which will be renamed Fortis Healthcare Ltd, will have a network of 74 hospitals in 10 Asia-Pacific countries, along with 190 diagnostic centres and 188 daycare specialty centres. It will have a total of around 23,000 employees, including 4,000 doctors.
“As the details of assets owned by the international company are unavailable, it would not be possible to comment on whether it was a fair valuation or not,” said an analyst with a foreign brokerage, declining to be identified.
“The price is below the recommended fair value, which has been suggested by a reputed independent valuation agency,” a company spokesperson said. “Furthermore, in a market that is characterized by high transaction multiple premium (over trading multiple) on account of scarcity of high-quality assets, we feel that this transaction has been done at an attractive value, without any such premium.”
Fortis International’s assets include Quality Healthcare Ltd, the largest primary care network in Hong Kong with 580 centres; Dental Corp. Pty Ltd, a dental care network in Australia and New Zealand with 177 centres; Hoan My Medical Corp., a private healthcare provider in Vietnam with six hospitals; Fortis Speciality Hospital, the under-construction specialty hospital in Singapore; and a key stake in the 350-bed Lanka Hospitals Corp. Plc in Sri Lanka. It also owns a large private pathology lab in the United Arab Emirates.
Shares of Fortis Healthcare (India) rose 3.57% to Rs 128.95 on the Bombay Stock Exchange on Tuesday, while the benchmark Sensex fell 1.27%.