INSUBCONTINENT EXCLUSIVE:
process of disposing its entire portfolio of healthcare assets
Fortis Healthcare, a listed company in India and, also controlling unitholder with a 30 per cent stake will pay 895.55 million Singapore
dollars ($660 million) including debt of some 220 million Singapore dollars.RHT Health Trust, which was originally named Religare Health
Trust, netted Fortis about 510 million Singapore dollars when it listed in October 2012
It was then largest IPO of a business trust sponsored by an Indian company in Singapore and second largest primary listing in Singapore that
year.In November 2017, Fortis announced its intention to buy over assets of RHT
The deal is aimed at consolidating entire portfolio of RHT Health, comprising two hospitals, 12 clinics and four new clinics into Fortis
These hospitals and clinics operated by RHT Health subsidiaries International Hospital Ltd, Fortis Health Management Ltd, Fortis Hospotel
Ltd, Escorts Heart and Super Speciality Hospital Ltd, and Hospitalia Eastern Pvt Ltd will now all come under Fortis umbrella
All these companies will become Fortis subsidiaries after acquisition.On Friday, RHT announced that it will distribute 0.752 Singapore
dollar per unit to unitholders within 45 calendar days from completion of disposal in accordance with requirements of SGX
This was in fulfilment of its commitment to distribute 95 per cent of net proceeds from sale to unitholders
It will retain 32 million Singapore dollars as undistributed proceeds to cover on-going expenses of Trust while it seeks a new business.As a
result of disposal, RHT will ceased to have any operating business and its assets consist wholly or substantially of cash, and hence RHT is
now deemed to be a cash trust.If no new business is found for what remains of RHT within 12 months, SGX will require RHT to delist from
A maximum 6 month extension to 12 month period is possible if a definitive agreement for acquisition of a new business has been signed and
provided acquisition must be completed within 6 month extension.Why did Fortis set-up RHT in first placeBack in 2012, then Fortis Healthcare
executive chairman, Malvinder Singh was quoted saying, "increasing demand-supply gap in healthcare delivery requires a significant increase
By pursuing this model, we are focusing on our core strength of delivering superior healthcare services with an emphasis on specialisation
and widening access to quality medical care."It appeared then that Fortis was following an emerging international business strategy of being
asset light so that they can access funds to sustain and accelerate business growth.Why is Fortis buying back its assets less than 7 years
after divestingWhen its intention was announced in November 2017, Fortis said, "transaction is beneficial and will be value accretive for
company and its shareholders as it would save significant clinical establishment fees that Fortis currently pays."Bhavdeep Singh, Fortis
Healthcare CEO, added, "This restructuring is a significant initiative and will integrate RHT's entire India-based asset portfolio into
Fortis, while also improving overall financial health of business."Although on surface, buying back assets for 900 million Singapore dollars
while only gaining 510 million Singapore dollars when listing in 2012 does not make business sense, a quick calculation will reveal that
Fortis walked away with a gain of more than 100 million Singapore dollars after counting dividends it gained as a 30 per cent unitholder of
RHT including final special distribution after disposal.Analysts are speculating that buying back its assets is an effort to strengthen
Fortis balance sheet in advance of an attempt to sell part of company or to find a strategic partner.The company has been known to be
talking to private equity funds as well as strategic investors including IHH Healthcare which is controlled by Malaysia's sovereign wealth
fund Khazanah Nasional Berhad.IHH Healthcare acquired a 31.1 per cent stake in Fortis in November 2018 but has been stopped by Supreme Court
from making an open offer for a further 26 per cent stake.The legal complication arose because of a court battle between brothers Malvinder
and Shivinder Singh - former promoters of Fortis - and Japanese drugmaker Daiichi Sankyo.The Japanese company has been trying to stop sale
of Fortis on grounds that it would hinder its ability to enforce an arbitration award against brothers, who Daiichi alleges withheld crucial
information when they had sold drugmaker Ranbaxy in 2007
The Delhi High Court has restrained Fortis from selling any assets without its permission.
