People stand near motorcycles parked in front of signage for Yes Bank Ltd. in Mumbai, India (Photographer: Adeel Halim/Bloomberg)  

Yes Bank Acquires 17.3% In Fortis Healthcare After Credit Default

Yes Bank Ltd. has acquired 17.3 percent stake in Fortis Healthcare Ltd. after the promoter group of India’s second largest hospital chain defaulted on loans provided by the Mumbai-based private lender.

It acquired 8.97 crore shares of Fortis on invocation of a pledge after promoter group companies defaulted in credit facility provided by the bank to them, according to stock exchange filing. This will make Yes Bank the biggest shareholder in Fortis.

The comes after the Supreme Court ordered that financial institutions holding pledged shares of Fortis Healthcare are free to sell them amid the company’s mounting troubles.

The Delhi High Court recently ordered attachment of unencumbered assets of erstwhile promoters Malvinder Singh and Shivinder Singh to execute the Rs 3,500-crore arbitral award Daiichi Sankyo won in Singapore against them for hiding troubles of erstwhile Ranbaxy Laboratory Ltd. at the time of sale to the Japanese drugmaker. The brothers also face allegations of siphoning off funds from the hospital chain and their financial services subsidiary Religare Enterprises Ltd.

The Serious Fraud Investigation Office, the white-collar crime agency of the country, has sought information and documents from Fortis as it looks into the alleged siphoning of funds.

Fortis reported a net loss of Rs 36.8 crore in the October-December period. The delayed financial results came with red flags from the auditor Deloitte, Haskins & Sells LLP over matters relating to the ongoing investigations, loans given and recoverability of certain vendor advances.

At Tuesday's closing price, Yes Bank’s stake in Fortis would be close to Rs 1,368 crore.