The board of Fortis Healthcare Ltd was split as it evaluated the four binding offers to invest in the company but finally selected the Munjal-Burman consortium keeping in mind the companyâs cash requirements and risk factors, a board member said on Friday.
Five board members voted in favour of the Munjal-Burman bid while three voted for other options, director Brian Tempest said. He was speaking to the media in Gurugram to explain why the board selected the Munjal-Burman offer on Thursday.
Tempest said the board comprises three members who have a lot of experience with Fortis and five that have been appointed in the past couple of months. âOf those five, two voted for the Munjal-Burman option and three voted for other options,â he said.
The consortium comprises Hero Enterprise Investment Office and Burman Family Office. Hero Enterprise is led by chairman Sunil Munjal, who is part of the family that runs Hero MotoCorp Ltd, Indiaâs biggest two-wheeler maker. The Burman family is the promoter of fast-moving consumer goods maker Dabur India Ltd.
Other bidders in the race to acquire Fortis were Malaysiaâs IHH Healthcare Bhd, Chinaâs Fosun as well as hospital chains Manipal Health and Radiant Life Care. Manipal was backed by private equity firm TPG while Radiant counts PE giant KKR as it main investor.
The decision to back the Munjal-Burman consortium was based on âcertainty versus risk and the point of view of liquidityâ of the company, Tempest said. The consortium has offered to invest Rs 1,800 crore in Fortis via shares and warrants.
The board also noted that the Munjal-Burman combine had about 30-40 investments in the healthcare sector, besides a hospital in Ludhiana and a nursing training school, he said.
Tempest said the board also had to make sure that the private equity investors in Fortis diagnostics unit SRL Ltd were taken care of and that the acquisition of Singapore-listed RHT Health Trust went ahead as planned.
The Munjal-Burman offer involves selling SRL and using the money to part-finance Fortisâ planned acquisition of RHT Health Trust, which owns some Fortis hospitals.
Tempest also said that law firm Luthra & Luthra will submit its forensic investigation report on allegations of embezzlement against the Fortis foundersâbrothers Malvinder and Shivinder Singhâlater this month.
Meanwhile, Fortis has requested the Singh brothers to resign from the SRL board. âI last spoke (to them) three-four days ago, requesting the documentation,â Tempest said.
The Munjal-Burman combine will sit with the SRL management to understand the diagnostics business. âThey have a couple of different scenarios,â he said, on the future of SRL.