Fortis Healthcare stock falls over 7% on board nod to demerger of hospitals business to Manipal Hospitals

The Fortis Healthcare stock fell over 7 percent after the firm said it would sell its hospital business to Manipal Hospitals and TPG Capital, creating the largest provider of healthcare services in India by revenue. At 11:37 am, the stock was trading 7.48 percent or 10 points lower at 131.80 on BSE. The stock which opened at 138 level fell to an intra day low of 128.25.

The market capitalisation for the Fortis healthcare stock stood at Rs 6,830 crore level on BSE. The announcement was made Tuesday evening. According to the deal, for every 100 shares of Fortis held, a shareholder will receive 10.83 shares in Manipal Hospitals. The Fortis board also cleared the sale of a 20 percent stake in diagnostics chain SRL Ltd to Manipal Hospitals in a Rs 3,900-crore deal.

Dr Ranjan Pai and US-based private equity firm TPG Capital, a shareholder in Manipal Hospitals since 2015, will invest Rs 3900 crore in Manipal Hospitals, to finance the acquisition of 50.9 percent stake in SRL Ltd.

Manipal Hospitals, part of Manipal Education and Medical Group (MEMG), is owned by Dr Ranjan Pai and has been backed by TPG, a leading global alternative asset firm and experienced healthcare investor since 2015.

The sale of Fortis to Manipal-TPG combined comes at a time when the promoters, Singh brothers are facing intense pressure over alleged financial irregularities at Fortis and Religare, which the Serious Fraud Investigation Office (SFIO) has been reported to be initiating.