New Delhi: Malaysia’s IHH Healthcare Bhd has become the controlling shareholder of Fortis Healthcare Ltd by acquiring a 31.1% stake in the company. Fortis Healthcare also appointed four persons from IHH Healthcare to its board in a meeting held at Mohali on Tuesday. The board approved the allotment of over 230 million shares through preferential issue to Northern TK Venture Pte Ltd, a wholly owned indirect subsidiary of IHH Healthcare, at ?170 per share of ?10 face value.
“With this preferential issue, IHH Healthcare has, through NTK, infused approximately ?4,000 crore of primary capital into the company and NTK has become the controlling shareholder in the company with 31.1% stake on the expanded capital,” Fortis said.
The mandatory open offer for acquiring up to 26% of the expanded capital from the existing shareholders of Fortis at ?170 per share for a consideration of up to ?3,300 crore would be completed in due course.
“The acquisition of a controlling stake in Fortis Healthcare, one of the leading healthcare service providers in India, represents a transformational investment for IHH Healthcare and demonstrates our commitment to invest considerable resources to expand and consolidate our footprint in India,” said Tan See Leng, managing director and chief executive officer, IHH Healthcare.
Law firm Khaitan & Co. was the legal adviser to IHH Healthcare in the transaction.
As reported by Mint, IHH Healthcare’s representatives joined the Fortis board as additional directors on Tuesday. The new board will have Tan See Leng along with other top officials, including Low Soon Teck, group chief financial officer of IHH Healthcare, Chan Boon Kheng, group head, strategic planning; business development (merger and acquisitions) of IHH Healthcare and CEO of its Southeast operations, and Bhagat Chintamani Aniruddha, who is on the board of IHH Healthcare and is the executive director for the healthcare sector of the investments division of Khazanah Nasional Bhd.
The reconstituted board has seven members with three current directors and four additional directors nominated by IHH Healthcare. Ravi Rajagopal, chairman of Fortis Healthcare, said that the reconstituted board will provide “strategic direction” and “vision” to the company.
“I am pleased to announce the completion of the investment by IHH Healthcare in Fortis. With this, I welcome the new IHH Healthcare nominated members on the board. The reconstituted board will actively provide strategic direction and vision to the company and will ensure that the company’s focus on clinical excellence, clinical outcomes, patient care and business results remains paramount. The board will be working closely with the management to further strengthen governance and internal control frameworks on par with other leading organizations,” he said.
The transfer of shares comes after IHH Healthcare in July won the bid to acquire cash-strapped Fortis Healthcare, which operates 34 hospitals across India and the world with a capacity of more than 4,600 beds, 2,600 doctors and 13,200 support staff who catered to 2.6 million patients in fiscal 2018.
The IHH Healthcare Healthcare team, along with senior representatives of Fortis will meet reporters on Wednesday, followed by a townhall meeting with doctors and employees in Gurugram on the same day, and a visit to Fortis Hospital in Bengaluru on Thursday. The resignation of CEO Bhavdeep Singh cleared the way for IHH Healthcare Healthcare to bring its own executives. Singh was the third top executive to resign after IHH Healthcare won the bidding war. Chief financial officer Gagandeep Singh Bedi quit in August and company secretary Rahul Ranjan quit in October.