Fortis ventures into South India

The Fortis group recently announced their decision to buy 48% stake in Chennai-based Malar Hospital for around Rs 42 crore. This move will mark the group’s first entry in South India. At present, Fortis has a network of 12 hospitals primarily in the north, and 16 satellite and heart command centres. The acquisition will be through International Hospital Ltd, a wholly-owned subsidiary of Fortis, and group company Oscar Investments Ltd (OIL). In the first phase, International Hospital Ltd will buy the promoters holding of 28% at Rs 30 per share. The total equity of the company is Rs 1.39 crore. Shivinder Mohan Singh, CEO and MD, Fortis Healthcare explained that Fortis will follow a similar strategy in Chennai of setting up hubs and spoke hospitals as they  have done in Delhi. Additionally, International Hospital along with Oscar Investments will inject Rs 14 crore as loan, which will be converted into 25% equity, subject to approval by Malar shareholders. OIL will acquire approximately 7% (of the expanded equity capital), while International Hospital will have 18%. Post conversion, International Hospital will hold 23% and an additional 18% equity, and another 7% held by Oil, taking up the total equity to nearly 48%. The acquisition will be funded through internal accruals and debt, he added. IHL and OILm would make an open offer to the shareholders of Malar Hospitals, as per the Securities and Excahnge Board of India guidelines. The group is expected to acquire a majority shareholding in the company after the open offer. Malar Hospital with 180 beds is a multi-speciality hospital focusing on comprehensive medical care, says a company statement. Fortis plans to increase its capacity to 40 hospitals and 6,000 beds by 2010, from the existing 12 hospitals and 2200 beds.  

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