Fortis Healthcare is demerging its hospitals business Fortis Hospitals into Manipal Hospitals and selling its 20% stake in diagnostics company SRL.
Leading medical tourism provider Fortis Hospitals is being sold and merged with Manipal Hospitals.
Fortis Healthcare is demerging its hospitals business Fortis Hospitals into Manipal Hospitals and selling its 20% stake in SRL. Manipal Hospitals, with investment from TPG Capital, will become a publicly traded company.
But after the deal was agreed two rival bidders intervened, including IHH Healthcare of Malaysia, who pulled out of a deal to buy Fortis last year after due diligence found problems.
Fortis Healthcare is the second largest healthcare group in India with 31 hospitals in India and 3 overseas, in Dubai, Sri Lanka and Mauritius. It served 2.5 million patients in 2017, including thousands of medical tourists.
Manipal Hospitals has 10 hospitals in India and one in Malaysia and served 1.3 million patients in 2017. SRL runs diagnostic services in India. The new group will also buy the hospitals of the RHT Health Trust.
Fortis has been struggling in the last 18 months and is under investigation for financial fraud by India’s Serious Fraud Investigation Office and the Securities and Exchange Board of India. The company’s founders Malvinder Singh and Shivinder Singh have denied allegations that they took funds from Fortis. The brothers now own less than 1% of the business after lenders seized their shares.
The merger will take up to a year, and the new group will have funds to invest in hospital purchases. Medical tourism is important for some group hospitals, but not others, and while Fortis was a pioneer of medical tourism; the focus has strayed due to the business and legal problems of the owners.