New Delhi: Malaysia’s IHH Healthcare Bhd, the new owner of Fortis Healthcare Ltd, has named an interim leadership team to manage the transition, one person aware of the matter said, adding it will appoint four directors to the hospital chain’s board on Tuesday. The interim leadership group includes Bhavdeep Singh, who stepped down as Fortis’s chief executive officer last week, chairman Ravi Rajagopal and Daljeet Singh, an old confidant of Fortis founder Shivinder Singh, the person cited above said on condition of anonymity.
IHH Healthcare to appoint 4 directors to Fortis board today
The three-member Fortis board will meet at Mohali near Chandigarh on Tuesday. IHH Healthcare chief executive officer (CEO) and managing director (MD) Tan See Lang and 10-12 top executives will also be in the city.
The IHH Healthcare team is expected to meet mediapersons on Wednesday, followed by a townhall meeting with doctors and employees in Gurugram on the same day, and a visit to Fortis hospital in Bengaluru on Thursday, the person cited above said.
“With this, curtain falls on the previous regime, allowing Southeast Asia’s largest hospital operator to immediately ramp up and expand its presence in India,” said one of the two persons cited above. “IHH will bring in its own directors. The meeting will see four representatives from IHH being appointed on the Fortis board,” this person said. After infusing funds, IHH has the right to name one-third of Fortis directors if it appoints the chairman. In case chairman is non-executive, it can name half of the board members.
The Malaysian company has also readied an acquisition plan for Religare Health Trust (RHT), a Singapore-listed business trust that owns some of Fortis’s assets, this person said.
In 2012, Fortis had raised around $511 million by transferring 14 key healthcare properties and four underdeveloped sites for 15 years to a business trust under RHT. “All infrastructure belonged to RHT and according to the agreement, Fortis had to pay rent to Religare Health Trust. IHH will have to buy back RHT, which will stop the outflow of ₹3,000 crore annually and will have a positive impact on the bottom line,” according to a second person aware of the developments.
The board is also expected to discuss Fortis’s liquidity requirements, paying employees and vendors, maintenance of equipment and infrastructure upgrades.
India’s antitrust regulator—the Competition Commission of India—approved the IHH-Fortis deal on 30 October, clearing the way for IHH Healthcare to buy a controlling stake in India’s second-largest hospital chain for around ₹4,000 crore. It will subsequently offer to buy an additional 26% from public shareholders through an open offer.
“The preferential allotment of shares will be confirmed in the upcoming meeting,” the second person said.
Fortis operates 34 hospitals across India and the world with a capacity of more than 4,600 beds, 2,600 doctors and 13,200 support staff who catered to 2.6 million patients in fiscal year 2018.
“IHH will have an advantage to immediately ramp up operations. The mood is now upbeat. IHH will not have any problem in operations even if the name of the hospital chain is changed,” the second person said. IHH Healthcare plans to rebrand Fortis hospitals to Gleneagles in the future, Mintreported on 14 July.
The resignation of CEO Singh also clears the way for IHH Healthcare to bring its own executives. Singh was the third top executive to resign after IHH won the bidding war. Chief financial officer Gagandeep Singh Bedi quit in August and company secretary Rahul Ranjan quit in October.
The Serious Fraud Investigation Office, which is investigating the debt-ridden Fortis, had recently called the company’s CEO and CFO for personal appearance, according to the first person.
In July, the Fortis board unanimously accepted the binding offer from IHH Healthcare, bringing the curtains down on a bidding war for the beleaguered hospital operator. The board of Fortis Healthcare approved a binding investment proposal from IHH to invest ₹4,000 crore by way of preferential allotment for a 31.1% stake, valuing the cash-strapped firm at ₹8,880 crore.