Now, Singh brothers seek ₹250 a share to close Fortis deal

The sale of a controlling stake in hospital chain Fortis Healthcare Ltd and its diagnostics subsidiary SRL Diagnostics Ltd has narrowed to a two-horse race. Private equity funds TPG Capital and General Atlantic Llc are on one side, while IHH Health Bhd of Malaysia, Asia’s largest healthcare group that operates the Parkway Pantai hospitals, is on the other, two people directly aware of the negotiations said.

KKR and Co LP and Bain Capital which were previously interested in the deal are no longer in the race, these people said, asking not to be named. Promoters Shivinder Singh and Malvinder Singh want close to ₹250 per share for Fortis Healthcare, the people said. Fortis shares closed on Monday on the BSE at ₹209.55.

The people cited above said the deal is likely to close in the next few weeks if the final round of negotiations conclude. “Both bidders have revised their bids and the discussions are in the range of ₹250 per share for Fortis alone, and another ₹2,000 crore for SRL,” said one of the two people, adding the overall enterprise value of the deal is likely to be around $3 billion.

TPG, which had earlier made a non-binding offer of ₹4,500 for both assets, has revised it upwards and brought in General Atlantic as a co-investor, the persons cited above added.

Mint was the first to report on April 24 that General Atlantic had entered the race for Fortis.

Under the terms being negotiated, the new buyer will initially buy a 26% stake in Fortis from the promoters, which will be followed by a mandatory open offer to public shareholders. Separately, the buyer will also acquire a controlling stake in unlisted SRL Diagnostics and listed Fortis Malar Hospitals Ltd, (a Fortis subsidiary that runs a hospital in Chennai) from the promoters.

After the stake sales, the Singh brothers, who own a 67.5% stake in Fortis Healthcare, will be the single largest shareholders, but will cede management control to the new investor, the persons mentioned above said.

While emails sent to Fortis Healthcare and RHC Holding Pvt. Ltd (RHPL), the holding firm for the Religare and Fortis brands, were not answered, an IHH Bhd spokesperson said: “IHH is always looking at various value accretive opportunities. However, it is not appropriate for us to comment on specific transactions and we will update the market if there are any material developments.” A TPG spokesperson declined to comment on the story. GA did not respond to a request for comment.