Fortis share sale: 2 private equity players in the fray despite legal issues

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Even as legal hurdles in the Fortis Healthcare share sale worth Rs 8,000 crore continue, the Singh brothers still have suitors in the fray to buy the pledged shares.

The IHH, Asia’s largest private operator in hospital space, had cold feet as a buyer because of the legal problems in the share sale after the Supreme Court said it had reaffirmed a status quo against the Singh Brothers.

Despite the hurdles, private equity players General Atlantic and TPG Capital, together, have entered into exclusive talks to buy a controlling stake in Fortis Healthcare, sources aware of the development told CNBC-TV18. The due diligence for this process has just started.

TPG and General Atlantic have offered to buy close to 25 percent stake in the company through fresh equity issuance, which will infuse funds in the company, and also buying stakes of promoters i.e. Singh brothers.

This will trigger an open offer for Fortis Healthcare shares, and give a controlling stake to the two suitors, combined.

But the promoters’ stake in the company can only be sold if the Supreme Court gives Singh brothers a go ahead for the same. The next hearing of the case, to be held on October 31, is crucial for the company’s future.

The legal hurdle started with Daiichi Sankyo moving the Supreme Court against Malvinder and Shivinder Singh regarding the erstwhile Ranbaxy deal.

Daiichi had bought Ranbaxy Laboratories from the Singh brothers back in 2008 and then sold it to Sun Pharmaceuticals for a lesser amount. In between, the company launched an arbitration process against the Singhs— the original promoters of Ranbaxy — alleging them of keeping crucial information secret during the deal.

Fortis’s stock plummeted from Rs 200-level to Rs 150-level because of the legal hurdles and the prices could to be tempting the suitors.