TPG nears deal for US$1.2bil Indian hospital chain

MUMBAI: A consortium led by TPG is nearing an agreement to gain control of Fortis Healthcare Ltd, India’s second largest private hospital chain by market value, people with knowledge of the matter said. The investor group, which also includes Manipal Health Enterprises Pvt, could announce a deal as soon as the next few days, according to the people, who asked not to be identified because the information is private. Under the plan being discussed, the operations of closely-held Manipal – whose backers include TPG and Temasek Holdings Pte – would be combined with Fortis’s business, the people said. Fortis is discussing issuing around 40 billion rupees (US$615mil) of new stock to TPG and Manipal through a preferential allotment, one of the people said. That would make the consortium the biggest shareholder in the publicly-traded company, the person said. Shares of Fortis climbed 2.9% in Mumbai, boosting its market value to about US$1.2bil. The enlarged company will seek to buy out other shareholders of SRL Ltd, the medical diagnostics provider that’s currently partowned by Fortis, according to the people. The TPG-backed investor group is in negotiations to acquire stakes in SRL from private-equity investors who hold about 30% of the company, one of the people said. A deal could value SRL at 34 billion rupees to 40 billion rupees, the person said. The TPG-led group is seeking control of Fortis as the hospital chain’s founders battle allegations of financial irregularities. India’s fraud watchdog and stock regulator are investigating Fortis after Bloomberg News reported that the Singh brothers took at least five billion rupees out of Fortis without board approval. Representatives for Fortis and TPG declined to comment, while an official at Manipal didn’t immediately answer phone calls seeking comment. The situation is fluid, and talks could drag on or break down, the people said. The TPG consortium is working to structure the transaction in a way that limits its exposure to any legal liabilities of Fortis, the people said. The deal will be conditional on receiving approval from the Competition Commission of India, according to one of the people. “TPG has a focus on the health care sector and this acquisition could be a good consolidation move,” said Rajat Dutta, executive director at consultancy IMAP India in Mumbai.