TPG-backed Manipal Hospitals acquires Fortis Healthcare, SRL Diagnostics
To mark one of the largest acquisition deal in the health space, Fortis Healthcare Ltd. has announced that its board has approved demerger of its hospitals business with TPG Capital-backed Manipal Hospitals, along with the sale of 20% stake in diagnostics chain SRL Ltd., in a Rs. 3,900-crore deal. The announcement was made late Tuesday night after a marathon meeting during the day.
What did Fortis Healthcare say in its statement?
"The Board has approved sale of its 20% stake in SRL Ltd. to Manipal Hospitals. The resultant entity Manipal Hospitals will be a publicly traded company listed on NSE and BSE. The remaining FHL will be an investment holding company with 36.6% stake in SRL." "As part of the proposed transaction, Dr. Ranjan Pai and TPG will invest Rs. 3,900 crore into Manipal Hospitals."
Manipal Hospitals to finance acquisition of 50.9% stake in SRL
FHL's statement further added, "The funds will be utilized by Manipal Hospitals to finance the acquisition of 50.9% stake in SRL (20% from FHL and 30.9% from other investors)." Manipal Hospitals, part of Manipal Education and Medical Group (MEMG), is owned by Dr. Ranjan Pai and has been backed by TPG, a leading global alternative asset firm and experienced healthcare investor since 2015.
Investment to support proposed acquisition of hospital assets
"In addition, the investment will support the proposed acquisition of hospital assets owned by RHT Health Trust and the growth of the hospitals and the diagnostics businesses," FHL added. As part of the deal, when the demerger becomes effective, for every 100 shares of FHL held by a shareholder, the shareholder will receive 10.83 shares in Manipal Hospitals -- the resultant combined hospitals business.
Fortis promoters Malvinder Singh, Shivinder Singh speak on the development
They said, "The transaction will unlock significant value for all stakeholders and also accelerate and expand access to high-quality healthcare services." "Keeping the interest of the company and stakeholders foremost, we continue to support the Management and the Board to successfully transition to the new joint entity. We want to thank everyone involved in the deal for reposing faith despite challenging circumstances," they added.
FHL CEO Bhavdeep Singh speaks on the merger
Singh said, "Much has transpired over the past 12-18 months at Fortis and in the healthcare industry at large; it's now time to get back to working with our doctors and nurses to saving and enriching lives." He added, "We believe Manipal has built a terrific franchise and team and the coming together of our two organizations will be transformational for the healthcare industry."
This will be a platform benefiting all: Ranjan Pai
MEMG chairman Ranjan Pai said the companies make a compelling strategic fit in terms of complementary geographies, clinical strengths as well as a shared commitment to providing outstanding patient care. "As the largest hospital operator in India, this will be a platform benefiting all, from the communities we serve, to our capable employees and our investors," he added.
The sale of Fortis Healthcare to Manipal-TPG
The sale of Fortis to Manipal-TPG combined comes at a time when the promoters, Singh brothers are facing intense pressure over alleged financial irregularities at Fortis and Religare, which the Serious Fraud Investigation Office (SFIO) has been reported to be initiating.
