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Tuesday, April 04, 2006

Fortis Healthcare plans Rs 1000cr IPO

After clinching the biggest acquisition in healthcare (Escorts Hearts Institute), the Shivinder-Malvinder promoted Fortis Healthcare is set to hit the capital market with the biggest initial public offer, IPO, in the sector, reports The Economic Times.

Though the company is still firming up the final issue size, sources close to the development said the size is expected to be in the region of Rs 1,000-1,300 crore (Rs 10-13 billion).

The company is learnt to have already roped in JM Morgan Stanley, Citi group and Kotak Mahindra to handle the issue. Fortis has also mandated consultancy major McKinsey to recommend a roadmap and strategy for the company’s future growth plan for the next three-four years.

McKinsey is expected to mainly suggest whether the company should go for greenfield and acquisition route to expand its hospital chain or opt for the management contract route for its pro-posed national spread.

Fortis Healthcare has set an ambitious national spread for its hospital chain, with a target of taking the total number of hospitals to 35 in next three-four years. The company currently has 10 hospitals, with two more hospitals set to be added in the next two months. Of this, one would be in South Delhi and the other in Jammu & Kashmir.

When contacted, Shivinder Singh, MD of Fortis Healthcare said the company’s IPO programme is still in the planning stage and no numbers have been finalised for the proposed offer yet.

The extent of equity stake, which will be offered through the proposed IPO, could not be ascertained. Ranbaxy, the promoters’ flagship company, has 17% stake in Fortis Healthcare, while the majority 83% is with the promoter family and friends.

Sources said a major factor in arriving at the final figure for the IPO would depend on whether Fortis would go solo for setting up its proposed Rs 1,200 crore (Rs 12 billion) Medicity project in Gurgaon or would join hands with leading cardiologist Dr Naresh Trehan who has also announced a Medicity project in Gurgaon.

The two have been in talks for entering into a tie-up for jointly establishing the Medicity project, which would have significantly brought down the fund to be raised by the company. There is, however, still no agreement on this between the two. The Medicity project will have multispeciality hospital, medical, nursing and paramedical colleges and accommodation facilities for the attendants of patients.

Among the hospitals owned by Fortis are the multi-speciality hospitals in Mohali (Punjab) and Noida and the two Escort hospitals - in Delhi and Faridabad.

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