Fortis Healthcare, India’s largest private hospital chain, has sold its Hong Kong unit – a primary healthcare chain – to insurance major Bupa for $355 million, a move that will help the company reduce debt.
The sale of the Hong Kong business, known as Quality Healthcare, marks the third sale of an overseas business by Fortis, owned by billionaire Delhi-based brothers Malvinder and Shivinder Singh, in the past six months.
In May, the hospital chain completed the sale of its Australian subsidiary, Dental Corporation, for around $263 million. The following month, it sold a majority stake in Vietnam’s Fortis Haon My Corporation for $80 million to Chandler Corporation. In all, including the Hong Kong transaction, Fortis has raised a total of $700 million through these divestments.
Malvinder Singh, executive chairman, and Shivinder Singh, executive vice-chairman, said in a joint statement on Monday evening that the sale was intended to intensify the group’s focus on India. “The divestment clearly aligns our business with our stated priorities. We have taken a strategic decision to intensify our focus on our core hospital and diagnostic business in India with a clear path to profitability,” they said.
“The divestment also enables us to further strengthen our balance sheet and substantially improve our net debt-equity ratio, creating further room for growth,” the brothers said.
The company plans to cut debt to Rs 2,300 crore, from Rs 7,500 crore now. ET had reported the move to sell Quality Healthcare and Fortis Haon My Corporation in June. After the divestment of the three overseas units, Fortis Healthcare, which had invested about $665 million in September 2011 for its foray into international markets, will recover about $700 million while retaining its presence in four countries — Singapore, Mauritius, Sri Lanka and Dubai, said a senior official of the company.
In all, Fortis Healthcare plans to raise about $875 million from asset sales and issue of equity in the last six months of the current fiscal. In October 2012, Fortis Healthcare had raised about Rs 2,400 crore from the listing of its business trust in Singapore.
“Following the completion of the deal, the company will have a debt of Rs 2,300 crore. This includes Rs 1,200 crore in the form of foreign currency convertible bonds and another Rs 1,100 crore of domestic debt,” said an official. The debt-equity ratio will come down to 0.3, he added.