Private equity fund TPG along with Manipal and IHH of Malysia have been circling the assets of Fortis for months.
Ever since the Supreme Court lifted the bar on banks and financial institutions selling the shares of Fortis that were pledged with them, most chose to cash out.
On February 15, Axis Bank, for instance, invoked 1.84 crore of promoter’s pledged shares, representing 3.54% of the share capital. The next day, ECL Finance, IDBI Trusteeship on behalf of First Gulf Bank and Yes Bank, Ratnakar Bank and Yes Bank on its own invoked 4.27 crore shares together representing another 8.24% of the company.
On February 17, Indiabulls Housing Finance did the same and then on February 20, ECL Finance also invoked 3.9 crore shares representing 8.6% stake, respectively. All this led to the promoter stake coming down to 2.38% from the earlier 33% mark in December 17, before dropping further to below the current 1% mark. But unlike most other creditors, Yes Bank has chosen to stay invested.
“Post invocation of the pledged shares, banks and financial institutions (Yes Bank, Axis Bank, Indiabulls) have the right to sell their shares to a third party, which can eventually become the promoter of the company,” said Kumar Saurabh and Ankeet Pandya, healthcare analysts at Motilal Oswal in their latest research report.
“…Given that current promoter holding is marginal, banks/financial institutes may look to find a new investor, which could lead to stock re-rating. We have valued the hospital and diagnostic business based on 20x and 18x 1HFY20E EV/EBITDA, respectively.”
Sources in the banking industry said that Yes’s original exposure to Fortis is believed to be about Rs 1,500 crore and have been collateralised against the promoter’s shares, commercial real estate owned by the company and aircraft.
“The loans are perfectly mortgaged and are fully secure and protected. Other banks such as Axis have been continuously selling in the market and now owns around 2.51% in the company.
Yes Bank has no board seat, so Kapoor is purely playing a strategic role seeking a better exit price,” said an official aware of the matter on the condition of anonymity. Most of these loans are from the 2012-14 vintage, much before the current mess.
A bank spokesperson told ET that “as a matter of policy, Yes Bank does not comment on client specific information”.
The potential suitors — TPGManipal and IHH — are awaiting an investigation by law firm Luthra & Luthra suitor before moving in through a voluntary
open offer, believe sources tracking the ongoing developments in the company.
The audit and risk management committee of board-run Fortis has mandated the Delhi headquartered law firm to investigate the company’s treasury
operations, inter-group and related party transactions, including compliance with applicable laws and regulations. This report, which will also explore allegations of founders siphoning off money, will determine the efforts by the besieged hospital chain to find itself a buyer.
This follows audit firm Deloitte’s qualified statement earlier this month that it was unable to comment or form an opinion on the company’s financial statements,pending an investigation.