Manipal-TPG's new offer for Fortis, values it at Rs 8,358 crore

Mumbai: The consortium of Manipal Health Enterprises (MHEPL) and private equity (PE) firm TPG Asia on Sunday revised their offer to acquire a stake in Fortis Healthcare, proposing to infuse Rs 2,100 crore into the company at a share price of Rs 160 per share.

According to the offer from Manipal-TPG, the copy of which was filed with the stock exchange by Fortis, the former have also proposed to merge MHEPL into Fortis Healthcare (FHL) and have valued the latter at Rs 8,358 crore.

"MGHS (Manipal Global Health Services), TPG VI and/or TPG VII (either by themselves or through their respective affiliates) will, by way of preferential allotment, subscribe to equity shares of FHL for an amount of Rs 2100,00,00,000 for a price per equity share of Rs 160," Manipal-TPG said in their revised offer.

The consortium said they will infuse the Rs 2,100 crore into FHL via preferential allotment, while the proceeds will be used to repay existing loans, for working capital and to partly fund the acquisition of relevant Indian entities from Religare Health Trust (RHT).

"It is clarified that the preferential allotment is being undertaken only to provide immediate liquidity to FHL by way of a minority investment in FHL. The preferential allotment and the ability to appoint directors as aforesaid, shall not vest control in the subscriber(s) and accordingly, no open offer is required to be made," the consortium said.

It had earlier proposed the demerger of FHL's hospital business, which it had valued at Rs 6,322 crore as on April 24. The hospital business was to be subsequently merged with Manipal hospitals, which had been valued at Rs 6,070 crore.

Manipal-TPG also said they have the right to appoint "such number of non-executive directors pro-rata to their shareholding after the preferential allotment (with a fractional number being rounded up to the nearest whole number) subject to the FHL Board comprising a minimum of 7 directors".

"A value of Rs 8,358 crores for FHL shall translate into a per share value of Rs 160 per equity share (being the same price per equity share as offered for the preferential allotment)," the consortium said.

"Upon the merger becoming effective, the shareholders of MHEPL as on the record date (to be fixed for purposes of the merger) shall be issued equity shares in FHL in accordance with the swap ratio for the merger."

In order to resolve FHL's obligation to provide an exit to its diagnostic arm SRL's private equity investors, Manipal-TPG have also proposed to purchase their stake, subject to agreement with the PE investors.

Manipal-TPG have proposed to purchase the 30.93 per cent stake of PE investors in SRL for Rs 1,113.4 crore.

After acquisition of the SRL PE stake, the SRL board will be restructured "so as to ensure that no member of the promoter group of FHL is part of the SRL board", Manipal-TPG said.

"Post the consummation of the merger, the acquirers will have a right to appoint such number of directors on the SRL Board that is pro rata to their shareholding in SRL. All appropriate corporate approvals of SRL and FHL shall be obtained to give effect to the above," it added.

Earlier this week, FHL said that it had received two "revised" offers to invest directly into the company.

According to FHL, IHH Healthcare Berhad has submitted a revised offer, whereas Hero Enterprise Investment Office and the Burman Family Office sent in their "modified investment proposal".

The company said its board has received a revised offer from IHH to invest directly into the company at Rs 175 per share cost.

The offer from Hero Enterprise Investment Office and Burman Family Office is to invest Rs 1,800 crore directly into Fortis without any due diligence.

The revised offer entails an upfront infusion of Rs 1,050 crore directly into Fortis.

"The remaining investment of Rs 750 crores will be infused into the company over the next four months," the Hero Enterprise and Burman family office said in a statement.

On its part, FHL has delegated its "expert advisory committee" (EAC) to review all the binding proposals for fund infusion.

On April 28, the company said its Board will meet on May 10 to consider the recommendations made by its EAC.

The company's Board has received offers from suitors such as Hero Enterprise Investment Office and the Burman Family Office, Fosun Health Holdings, IHH Healthcare Berhad, Manipal Hospital Enterprises and Radiant Life Care for infusion of funds.