Fortis ka Swayamvar

Fortis is the Draupadi of Indian health care domain. It’s in the middle of the mythological swayamvar ( males compete against each other to marry the girl).

Four princes have already asked for Fortis’ hands:

1. Manipal & TPG valued Fortis at INR 5000 crore.
2. IHH valued Fortis at INR 8400 crore.
3. Munjals and Burmans offered to infuse INR 1500 cash, without due diligence.
4. Fosun has offered to invest INR 2300 crore.
5. KKR & Radiant Lifecare is about to submit their bid.

Problems with Fortis group:

1. Ongoing investigations by regulatory authorities in response to multiple red flags raised.
2. Stiffened credit lines and lack of liquidity
3. Complex and insufficient holding structure, which requires multiple payments (including the proposed Rs. 4,650 crore payment to Religare Health Trust[RHT])
4. Inability to access funds in the equity capital market.
5. Litigation against former promoters and lack of capital. — Link

Is it the next Satyam?
Investigations have revealed that Fortis’ board is not fit to wade through the mess.

Moreover, to evaluate the three bids, shareholders need more credence at the board level. While chairman Harpal Singh is a close relative of the erstwhile promoters, Brian Tempest is a former CEO of Ranbaxy, which the former promoters sold in 2009. Tejinder Singh Shergill, whose appointment as independent director is up for shareholder approval, also has a long association with Fortis going back to 2003. ( Source: ET)

Dig deeper: Bloomberg profiled five bidders.

Update: Why is Fortis so valuable? ( Business Standard)

With over 45 health care facilities and over 300 vibrant diagnostic centres, Fortis is India’s second-largest hospital chain — next only to Apollo, which has 64 hospitals with 10,000 beds. Therefore, any international or domestic hospital chain that buys Fortis will simply catapult to the numero uno position.