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Rediff.com  » Business » Fortis in talks to buy Lanka hospital chain

Fortis in talks to buy Lanka hospital chain

December 10, 2009 02:19 IST

Move comes within months of acquiring Wockhardt hospitals.

Fortis Healthcare, a hospital chain promoted by former Ranbaxy owners Malvinder Mohan Singh and Shivinder Mohan Singh, is close to a major acquisition overseas. The move comes within months of the company acquiring 10 hospitals belonging to Habil Khorakiwala-promoted Wockhardt Hospitals.

Fortis Healthcare was in advanced discussions to acquire three hospitals belonging to the Asiri Group of Hospitals, Sri Lanka's largest private health care provider, according to investment bankers having knowledge of the deal.

The Asiri Group has four hospitals -- Asiri Hospital, Asiri Surgical Hospital Plc and Asiri Central (all based in Colombo) and Asiri Hospital in Matara. Asiri Surgical Hospital Plc in Colombo is the flagship and is listed on the Colombo Stock Exchange.

The group is also setting up a fifth hospital in Colombo, its largest facility with over 260 beds with an investment LKR 400 crore (over Rs 160 crore).

Asiri Hospital has 29 percent shareholding in ASHP and over 40 percent shareholding is with the public.

If the deal goes through, Fortis would get a minimum of 250 beds in Sri Lanka, a country with less than 4,000 beds and a limited number of organised health care players, said sources.

Early this year, Fortis had made its maiden overseas foray by acquiring Clinique Darne, the largest hospital in Mauritius, by teaming up with CIEL, a Mauritius-based industrial group. In August, Fortis had bought 10 hospitals belonging to Wockhardt for Rs 909 crore.

The Singh brothers are sitting on a cash pile of over Rs 10,000 crore from sale of their family stake in Ranbaxy Laboratories to Daiichi Sankyo of Japan.

"These are market speculations and I will not comment on such rumours," said Shivinder Mohan Singh, vice-chairman and managing director of Fortis, when contacted. An e-mail sent to Asiri remained unanswered.

"We deny that we are in talks with the said group," a Fortis spokesperson said.

Sources said Fortis was trying to acquire hospitals in England earlier, but high valuations were the main deterrent in closing deals. Fortis was actively looking at acquisition targets in Africa and the South East, Shivinder had said earlier.

Chairman and Managing Director Ashok Pathirage-led Asiri Group was planning to sell off its 100-bed Asiri Central, the erstwhile Asha Central, which was acquired two years ago.

The sale is to part-fund the new 13-storied Asiri Central hospital, which would be the largest modern hospital in Sri Lanka. The group had also stalled its plan to set up a new hospital in Kandy to concentrate on funding the new hospital, sources said.

"At this point of time, it is not certain whether discussions include the new hospital. The deal could range between Rs 200-250 crore," said an investment banker.

ASHP had revenues of LKR 115 crore (Rs 47 crore) with a net profit of LKR 17 crore (Rs 7 crore) for the year ended March 2009, according to its annual report.

Pathirage, is the chairman of the Softlogic Group, which is a leading diversified corporate entity in Sri Lanka and is also the chairman of Uniwalkers and its subsidiaries.

Apollo Hospital, the largest hospital chain in India, was the first to enter Sri Lanka, following an invitation from the government there to set up a modern hospital in that country. However, Apollo Hospitals had to exit the joint venture in 2006, after failing to stave off a hostile takeover bid by a local business tycoon Harry Jayawardena. The Apollo Hospital in Colombo was later re-named Lanka Hospitals.
Vandana & P B Jayakumar in Mumbai
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