The Munjal and Burman families have now entered the race for troubled Fortis Healthcare Ltd. that’s soon turning into a much wanted asset.
Hero Enterprise Investment Office and the Burman Family Office have offered to invest Rs 1,250 crore directly into Fortis through a preferential allotment, according to an offer letter attached to the stock exchange filing. The board of Fortis is currently evaluating this offer.
Hero and Burman group entities are shareholders of Fortis, holding about 3 percent in the hospital operator, the same letter stated. The Munjals own Hero MotoCorp Ltd. while the Burman family are promoters of fast moving consumer goods firm Dabur Ltd.
The proposal comes at a time when Fortis already has two rival offers from Manipal Health Enterprise Pvt Ltd. and IHH Healthcare Bhd. for its hospitals and diagnostics businesses. This at a time when founders Malvinder Singh and Shivinder Singh are battling allegations of siphoning funds from the hospital chain and non-bank lender Religare Enterprises Ltd., Bloomberg reported earlier. India’s fraud watchdog and stock market regulator are both investigating the company which is also under mounting debt. The brothers stepped down from the boards of the two companies earlier this year.
“We are concerned regarding the Company’s (Fortis) future, as it presently finds itself at a very critical juncture in its existence,” the Munjals and Burmans said in their letter to Fortis directors. “While we have strong faith in the potential of the company, the various issues faced by the company over the last many months are a cause of grave concern,” it added.
As part of the offer, the two entities will jointly invest Rs 500 crore immediately and Rs 750 crore after completion of due diligence within the next three weeks. The share allotment and pricing of the issue will be according to market regulator SEBI’s ICDR (Issue of Capital and Disclosure Requirements) rules or at Rs 156 per share, whichever is higher, according to the letter. The funding can only be used to repay employee dues, unpaid loans which have matured and payment to pressing creditors. The offer says the two investing firms will be entitled to one seat on Fortis’ board.
Earlier this week, Ranjan Pai-led Manipal Health sweetened its deal to buy the hospital business of Fortis by offering more value to shareholders. That offer is valid till April 17. Asia's largest hospital operator IHH Healthcare later topped that offer by proposing a potential bid of about $1.3 billion to take control of Fortis, Bloomberg reported.
What Value Are Shareholders Getting
- Manipal’s offer values Fortis Healthcare at Rs 156 per share, according to Nomura.
- IHH Healthcare is willing to pay as much as Rs 160 per share, sources told Bloomberg asking not to be identified because the information is private.
- Munjals and Burmans have offered Rs 156 per share, or a price that is determined by SEBI’s ICDR rules.