Fortis Healthcare Ltd, the country's largest healthcare chain, on Monday, hived off its non-core business and related assets into a separate company that will be listed as a business trust on the Singapore Exchange (SGX) to raise around Rs. 2,000 crore, said a senior company executive.
Billionaire brothers -Malvinder Mohan Singh and Shivinder Mohan Singh - have spun off the company's out-patient departments (OPDs), existing and upcoming hospital buildings and radiology division, among others, into Religare Health Trust. Fortis will own one-third of the trust with overseas investors holding the rest. The Singapore Exchange approved the listing proposal for Religare Health Trust last Friday.
The hived off business has been valued at around Rs. 3,000 crore and the trust will raise about Rs. 2,000 crore by selling two-thirds of its units to investors. These funds will go to Fortis, enabling the healthcare company to retire debt and focus on future growth opportunities. Fortis has an accumulated debt of Rs. 5,000 crore.
After the de-merger, Fortis Healthcare will be left with in-patients departments, intensive care units, operation theatres, and emergency services, which company executives say constitute the core business of the company.
This is Fortis's second restructuring move in the past one year. Last September, it announced the acquisition of Fortis Healthcare International for $665 million from a promoter group company, a deal which attracted criticism for overvaluing the acquired business.
The current restructuring exercise is aimed at creating an asset-light healthcare company focused on patient care and unlocking value for the company to create future growth opportunities, said Vishal Bali, the Singapore-based group CEO of Fortis Healthcare.
"The transaction allows us to create more value within the company by focusing more on the clinical side of patient care," Bali said.
As of now, a few Indian companies, including Indiabulls, have got business trusts listed on the Singapore Exchange. But this will be the first Indian business trust with healthcare assets to be listed on that exchange.
Like a company, a business trust operates and runs a business enterprise. It has assets that generate assured income. Business trusts are supposed to be more tax efficient than companies. ET had reported on February 3 that Fortis plans to hive off its non-core business and related assets and would list on the SGX as business trust.
The 3 billion euros is held in an intermediate HFSF account.
Greece has been struggling through a fifth year of recession and political turmoil, triggered by an inconclusive vote this month that has fanned fears the country could be forced to leave the euro zone.
The country's struggling banks have been among those hit hardest by the uncertainty, with a rise in deposit outflows.
Huge write downs from a landmark restructuring to cut Greece's debt nearly erased the capital base of its biggest four banks, which rely on the ECB and the Bank of Greece to meet their liquidity needs, after savers began pulling their cash out on fears that Greece could go bankrupt and out of the euro zone.
Last week the ECB stopped providing liquidity to some Greek banks because their capital base was depleted.
With access to wholesale funding markets shut on sovereign debt concerns, Greek banks have been borrowing from the ECB against collateral, and from the Greek central bank's more expensive emergency liquidity assistance (ELA) facility.
Bleeding deposits, the country's lenders have borrowed 73.4 billion euros from the ECB and 54 billion from the Bank of Greece via the ELA as of end-January.
Together, the sums translate to about 77 percent of the banking system's household and business deposits, which stood at about 165 billion euros at the end of March.
Funded by the euro zone and the IMF, the HFSF is due to inject up to 50 billion euros into the country's banks in return for shares which it hopes to sell some day.
The funds are part of a second, 130-billion euro bailout Greece agreed this year with its euro zone partners and the IMF to stave off bankruptcy.
So far the HFSF has received 25 billion euros under the scheme and the 18 billion euros it disbursed on Monday is its largest payout to banks.
Key details of the recapitalisation plan for Greece's battered banking sector, including the mix of new shares and convertible bonds to be issued, and whether call options will be included as incentives, remain unclear. That framework is expected to be finalised after a government is formed, following a June 17 election.