Fortis in talks for Care Hospitals: reports
03 Nov 2010
Fortis Healthcare is in talks for a majority stake acquisition in Hyderabad-based Care Hospitals, which would help the group build its presence in south India and bridge the gap with rival and India's largest healthcare chain Apollo Hospitals according to people familiar with the development says a report in The Economic Times.
The company is discussing with a few minority investors including ace investor Rakesh Jhunjhunwala, UK-based fund Ashmore and Matrix Laboratories founder N Prasad, who between them, own 50 per cent of the hospital. The company plans to buy their stake which could cost it over Rs300 crore according to the report.
Delhi-based Fortis, which recently lost a corporate takeover battle for control of Singapore's Parkway thus narrowly missing out on emerging as the largest healthcare firm in Asia, intends to take a majority stake in Care Hospitals, according to one of the persons close to the negotiations the report says.
Though analysts say it would be a challenge to get the rest of the minority investors to agree to a strategic acquirer getting control of the hospital chain, according to another person privy to the development, the primary stumbling block was differences over valuation.
Ashmore had picked up the stake in January 2008, by buying out India Value Fund's holding for Rs90 crore. A group of doctors led by cardiologists B Soma Raju, chairman hold a significant minority stake in Quality Care India as copromoters, in the holding company Care Hospitals. Also there are a large number of their friends and associates close who also collectively hold a significant minority stake.
The hospital had earlier appointed investment banker NM Rothschild to raise funds for its expansion plans. Care Hospitals, was set up by cardiologist Dr Raju and the chief executive, Reddy in 1997 as a 100-bed heart-care hospital. It is now a multi-specialty hospital chain with over 1,400 beds across 12 hospitals mostly across south India, according to the company's website.
According to estimates, Care Hospitals has annual revenues of around Rs450 crore with a double digit operating profit margin.
Fortis Healthcare promoters, brothers Malvinder Singh and Shivinder Singh, promoters of Fortis Healthcare, have been aggressively acquiring businesses in healthcare and financial services after selling their flagship business Ranbaxy Laboratories to Japan's Diaiichi Sankyo in 2008.