Fortis Healthcare’s Board has approved the demerger of its hospitals business to Manipal Hospital Enterprises and given nod to selling of its 20 percent stake in SRL to Manipal Hospitals.
Now, as a result, the resultant entity Manipal Hospitals will be a publicly traded company listed on National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The rest part of Fortis Healthcare will be an investment holding company with 36.6 percent stake in SRL.
Reacting to the development Bhavdeep Singh, Fortis Healthcare CEO said, as an organisation “we are thrilled with this transaction as it enables us to take the next bold step into our future”.
“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.
“We believe Manipal has built a terrific franchise and team and the coming together of our two organisations will be transformational for the healthcare industry,” Singh said.
Dr Ranjan Pai, Chairman of Manipal 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. We have an excellent opportunity to leverage this strength to expand coverage and service delivery, in response to the burgeoning demand for world class healthcare,” Pai added.
Meanwhile, Dr Ranjan Pai and TPG will invest INR 3,900 crore in Manipal Hospitals as part of the proposed transaction.
The funds will be utilised by Manipal Hospitals to finance acquisition of 50.9 percent stake in SRL.
Moreover, the investment will support the proposed acquisition of hospital assets owned by RHT Health Trust (RHT) and the growth of the hospitals and the diagnostics businesses.
Manipal Hospitals, part of Manipal Education and Medical Group, promoted by Ranjan Pai and has been backed by US-based PE firm TPG.
What it means?
The combination of Manipal Hospitals and Fortis Hospitals will lead to creation of the largest provider of healthcare services in the country by revenue with 41 hospitals, 4 hospitals overseas and 11,000 plus installed bed capacity (including teaching hospital beds of Manipal Hospitals).
It will have a staff pool consisting of 4,200 doctors, 9,300 nurses and 11,400 other employees across India.
All said and done, the proposed transaction is, however, subject to shareholders’ approval, creditors’ approval, applicable regulatory approvals (including Competition Commission of India, SEBI, stock exchanges and National Company Law Tribunal (NCLT)) and other customary conditions precedent.