Malaysia: IHH Healthcare is in talks with capital markets regulator, the Securities and Exchange Board of India (Sebi), to proceed with its open offer for Fortis Healthcare.
IHH Healthcare is trying to seek Sebi’s permission after its legal advisors – senior advocate Harish Salve, law firms Karanjawala and Co, Saraf & Partners and others – informed that, as per a Supreme Court ruling on September 22, all prior status quo orders of the Delhi High Court stand vacated.
This, according to the legal experts, paves the way for an open offer, the top executives of IHH Healthcare and Fortis said.
The apex court has disposed of a suo motu contempt petition, Kelvin Loh, chief executive of IHH Healthcare, and Ravi Rajagopal, chairman of Fortis Healthcare, told ET in an exclusive interaction.
“And so right now, we are seeking the next path forward, talking to regulators, including Sebi to take next steps,” Loh said. “We are in discussion with Sebi; I think we will wait for the evolution of those discussions, and hopefully they’ll come soon.”
IHH is the largest shareholder in Fortis with a 31.1% stake. It has so far spent and earmarked ₹7,000 crore for the acquisition, including the amount kept in an escrow account pending court clearance.
Rajagopal said Fortis has invested ₹1,000-1,200 crore over the last four years in operational capital expenditure and repaid ₹2,700 crore in bank loans, but its expansion plans have been stalled due to the ongoing legal proceedings. He added that the SC had disposed of various petitions in this regard. “The opinion we got from our external counsels, including our own, (we) believe that it leads to a vacation of the status quo matters… but that wasn’t explicitly stated. Therefore, in our view, the status quo no longer applies, and therefore, IHH is free to go ahead (with the mandatory open offer). But out of deference to Sebi, IHH thought it is proper to just seek their concurrence,” he said.
Sebi has not given a final view on the matter yet. ET was the first to report about these discussions on October 13.
On inducting a partner for Fortis, Loh said he gets several such inbound requests seeking partnerships but “at this point it’s too early for that. We have now reached a point where we feel confident that we can operate the assets well.”
“We really wish that the matter would have gone through and that would have given us 51% stake. We are not in a business of selling or divesting shares,” he said, adding that IHH was a strategic healthcare operator, “where we buy something we really want to run it for good and can grow unless there is a real compelling reason as to why we will (onboard a partner).”
There has been speculation that several local strategic and business groups had sent feelers to IHH. On specifically being asked about the Adani Group, Loh said “I would neither confirm nor deny.”
In its order, the apex court had, however, directed the Mumbai High Court to launch a forensic audit of Fortis’ dealings with RHT Health Trust, which owned some of Fortis’ hospitals.
“Everything goes back to the executing court,” Justice Lalit said. “Needless to say that it shall be open to the executing court to pass such directions as the facts and circumstances presented before it may justify,” according to the September order.