Manipal Hospitals announces revised offer for Fortis Healthcare’s Hospital Business
Revised terms reflect Manipal and TPG’s commitment to delivering long-term shareholder value
- Revised offer values Fortis Healthcare Limited (“FHL”) at INR 155 / share
- Values hospital business of FHL at INR 116 / share, 21% higher than previous offer
- Existing shareholders of FHL to hold ~50% stake in MHEPL post demerger of hospital business of FHL
- Rights issue of INR 4,000 crores post demerger of hospital business of FHL into MHEPL
- Dr. Ranjan Pai-led Manipal Education and Medical Group (“MEMG”) to acquire 31% stake in SRL from private equity investors, take management control
- FHL to continue to hold 56.6% stake in SRL
Mumbai, April 10, 2018 – Manipal Hospital Enterprises Private Limited (“Manipal Hospitals”) today submitted a revised offer to Fortis Healthcare Limited (“FHL”), as part of a proposed solution that is intended to ensure the long-term sustainability and value creation of Fortis’ hospital business (“Fortis Hospitals”). FHL will demerge its hospital business into Manipal Hospitals as previously announced, and create a combined hospital business that will be a publicly traded company listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Manipal Hospitals, part of MEMG, is majority owned by Dr. Ranjan Pai and has been backed by TPG Capital Asia since 2015.
As part of the revised offer, Fortis’ hospital business is valued at equity valuation of INR 6,061 crores (INR 116 per share) which represents an upward revision of approximately 21% on the equity valuation per the previous offer. Manipal Hospital’s equity valuation continues to remain as before at INR 6,070 crores. MEMG will separately purchase a 30.9% stake of SRL from existing private equity investors, and will take on Board and Management control of the business. After the completion of the demerger of hospital business of Fortis into Manipal Hospitals, MEMG will work with FHL to enable the merger of SRL into FHL.
A rights issue of INR 4,000 crores will also be initiated following the demerger to support the proposed acquisition of hospital assets owned by RHT Health Trust (“RHT”). This will provide an opportunity to the shareholders of FHL to participate on an equal basis with MEMG and TPG to fund the capital needs of the combined hospital business.
Manipal Hospitals and Fortis Hospitals make a compelling strategic fit, strengthening the hospital businesses with complementary geographies, clinical strengths and a shared commitment to provide outstanding, quality patient care in healthcare practices. India’s healthcare industry is one of the country’s largest sectors in terms of both employment and revenue generation, and is poised for even higher growth. As two of the leading hospital chains in the country, the combined entity will support the industry’s development and become India’s largest hospital services provider by revenue, with a pan India presence operating 41 hospitals in 19 cities across 12 states, in addition to 4 hospitals overseas. The talented staff pool will consist of more than 4,200 doctors, 9,300 nurses and 11,400 other employees across India.
“We continue to believe in the compelling prospects from the combination of the hospital business of Manipal and Fortis,” said Dr. Ranjan Pai, Chairman MEMG. “We hope that our revised offer addresses the concerns certain Fortis shareholders had raised and believe this offer is in the interests of all stakeholders, including Fortis’ shareholders.”
Dr. Ranjan Pai adds, “Manipal is one of India’s most trusted and valued healthcare providers today. Our breadth of services and expertise, together with TPG’s deep knowledge and operational experience in the healthcare industry, will further support the growth and development of the combined hospital business.”
As the 4th largest hospital chain in the country with a strong presence in South India, Manipal has 65 years of experience and a team of more than 2000 expert doctors across 55 specialist areas. Manipal Hospitals has been ranked among the top 5 hospitals in “India’s Most Caring Hospitals” survey, which was conducted by the Ministry of Consumer Affairs, Government of India.
As a leading global alternative asset firm, TPG has extensive investor experience and expertise in healthcare, globally and in Asia. Across all TPG funds globally, TPG has invested more than US$13 billion in the healthcare sector during the firm’s history. In Asia, healthcare remains one of TPG’s core area of investments. In addition to Manipal Hospitals, TPG has invested into several leading hospital businesses across Asia including Healthscope in Australia, the pan-Asia hospital group Parkway Holdings and United Family Healthcare in China.
Allegro Capital, Goldman Sachs and Kotak Investment Banking acted as financial advisers for Manipal and TPG on this deal, while Standard Chartered acted as financial adviser to FHL. AZB Partners served as legal advisers for Manipal and TPG, and Cyril Amarchand Mangaldas for FHL.
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About Manipal Hospitals
Manipal Hospital Enterprises Private Limited is a leading healthcare delivery business with strong presence in South India across 11 hospitals including one hospital in Malaysia and operates 6,300+ beds (including c. 3,400 beds in teaching hospitals). It provides world-class infrastructure across new hospitals and recently renovated mature hospitals, and operates a network of 2,900+ doctors (including c.1,300+ doctors in teaching hospitals) and c.7,500+ support staff which catered to c. 1.3+ mn patients during FY17.
TPG is a leading global alternative asset firm founded in 1992 with more than $79 billion of assets under management and offices in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San Francisco, Seoul, and Singapore. TPG’s investment platforms are across a wide range of asset classes, including private equity, growth equity, real estate, credit, and public equity. TPG aims to build dynamic products and options for its investors while also instituting discipline and operational excellence across the investment strategy and performance of its portfolio. For more information, visit www.tpg.com.
About Fortis Healthcare
Fortis Healthcare Limited is today amongst the leading healthcare delivery chains in the country currently encompassing both hospitals and diagnostics businesses. It operates a network of 34 hospitals across the country and internationally with c.4,600+ capacity beds and employs c. 2,600+ doctors and 13,200+ support staff which catered to c. 2.6+mn patients in FY17. It also has presence in Dubai, Mauritius and Sri Lanka.
About SRL Limited
SRL Limited, a subsidiary of FHL is primarily involved in providing diagnostics services and is amongst the leading diagnostics chains in India with a significant market share in the organized diagnostics segment. It conducted over 37.5mn tests in LTM Dec 2017 and had a network of 356 laboratories and 5,245 collection points as of FY17. FHL currently owns a fully diluted stake of 56.6% in SRL.