New Delhi: In a repositioning of business strategy, Malvinder Mohan Singh stepped down as the chairman of financial services firm Religare Enterprises Ltd to push for a bigger global footprint for his healthcare business under hospital chain Fortis Healthcare Ltd.
Shivinder Mohan Singh, brother of Malvinder Mohan Singh, stepped down as director from Religare, following which Sunil Godhwani took over as the new chairman and managing director. Shachindra Nath, current group chief operating officer, was elevated as chief executive officer.
Top-level shuffle: Malvinder Mohan Singh, who stepped down as the chairman of Religare Enterprises, will focus on the healthcare segment. B.Mathur/Reuters
The top-level management shuffle at Religare is a signal of Malvinder Mohan Singh’s intention to step back from the day-to-day running of the financial services business to focus on the healthcare segment, building on recent acquistions. As the largest shareholders in Religare, with a majority stake, he and his brother would however retain oversight.
Fortis Healthcare last month bought a 23.9% stake in Singapore-based Parkway Holdings Ltd from TPG Capital, valued at Rs3,118 crore. In August, it purchased 10 hospitals owned by Wockhardt for Rs909 crore; in 2005, it acquired Delhi-based Escorts Heart Institute for Rs650 crore.
“There is a huge opportunity in the healthcare sector. While the financial services sector has a model to follow for global expansion, healthcare doesn’t,” Malvinder Mohan Singh, who plans to move to Singapore to consolidate and build the healthcare business, said in an interview.
“So, this decision was more about revisiting reponsibility between the three of us,” he said, referring to his brother, Godhwani and himself.
In addition to Nath, group chief financial officer Anil Saxena was also inducted into the board of directors at Religare, along with three new members, all of whom are expatriates.
”We are looking at other opportunities—both organically and inorganically,” Godhwani said. “For our investment banking platform, we would look at emerging markets such as Indonesia and Malaysia.”
Religare’s two focus areas will be investment banking and asset management. The company has set aside a sum of $1 billion (Rs4,450 crore) for creating an asset management platform, begining with the acquisition of a 65% stake in US-based Northgate Capital for an estimated Rs900 crore.
Religare in March applied for an asset management licence in Japan. The Financial Times has reported, citing a London placement firm, that Religare is trying to employ I-bankers in London.
New acquisitions will be primarily in the US and Europe, according to a company spokesperson. For the investment banking business, Religare will opt for both organic and inorganic growth, said the spokesperson.
Malvinder Mohan Singh, however, categorically ruled out any stake sale in Religare. “This is a process and not an end by itself. Our aspiration is to be at the forefront on a global level and step by step we are getting there,” he said.
He added that their focus is on creating a global model for healthcare, with Shivinder Mohan Singh handling the domestic business while he would concentrate on the global businesses.
This is not the first time that the Singh family has handed over running of businesses to professionals.
In 1999, the Singhs’ father, Parvinder Singh, handed over charge of Ranbaxy Laboratories Ltd to D.S. Brar. Ranbaxy was sold in 2008 by the Singh brothers to Daiichi Sankyo Co. Ltd, which paid Rs10,000 crore for the 34.82% stake owned by the two brothers.
The acquisition of Parkway was the most expensive overseas by an Indian healthcare services firm. Parkway, with a network of 16 hospitals offering 3400 beds—in Brunei, Singapore, Malaysia, China, UAE along with one hospital in Kolkata in partnership with Apollo and a greenfield project in Mumbai—takes Fortis’ count to 62 hospitals with a capacity of 10,000 beds.
“Parkway was clearly tne biggest investment we have made, making us the fourth largest healthcare network - the top three are in the US - with a geographical footprint across eight countries,” said Singh. “There is no global healthcare company today and we are working to create one,” he added.
While Asia will continue to be the focus of Fortis’ overseas exapnsion plans in the near term—the group already has a presence in Mauritius—Singh has said in the past that the next phase of expansion will be outside the region.
Analysts sounded a note of caution. “One gets a feeling that they are trying to grow too fast,” said the head of research at a Mumbai-based brokerage who requested anonymity as REL directly competes with his company in the broking and financial services space.
The Singh brothers’ ambitious expansion plans could in the short run be a prescription for stock volatility, he said.
“But we are asking people to hold on to the shares as despite the short term hiccups, the group has strong growth prospects,” the research head said. “Some of the recent acquisitions, both in healthcare and financial services businesses augur well for the long-term growth, but have not come cheap.”
Religare Enterprises rose 1.66%, or Rs6.45, to Rs395.80 at the close of trading on the Bombay Stock Exchange even as the Sensex ended little changed at 17,941.37. Fortis Healthcare lost 1.42%, or Rs2.50, to Rs174.
N. Sundaresha Subramanian contributed to this story.