East Bridge Capital Raises Stake To 9.7% In Fortis Hospital

Private Equity firm Eastbridge Capital has raised its stake in Fortis Hospital that will give it voting rights after the hospital chain announced demerging the listed entity into Manipal Hospital.

According to its filings to SEBE, Eastbridge has raised its stake from the current 5.79 percent to 9.73 percent. Last week the Fortis board approved the demerger of its hospitals business to Manipal and TPG Capital, along with 20% in diagnostics chain SRL in an Rs 3,900-crore deal. However, the deal had not gone down well with minority shareholders who had expressed their concerns about the valuation.

On Tuesday Bloomberg reported that brokerage firm Citi and Nomura downgraded Fortis shares. While Citi downgraded the shares to Rs 120 from the previous target price of Rs 178, Nomura wrote since the funds will mostly go towards settling existing liabilities, interim capex and interest payments the use of the proceeds is seen as a “negative surprise” and will diminish the overall equity value for existing Fortis shareholders.

"We believe minority shareholders of Fortis Healthcare are not set to benefit from this current deal as the deal is tilted in favour of TPG+ Manipal hospitals,” wrote brokerage firm Edelweiss in its research note. Edelweiss had even pointed out that the deal in its current state not go through.

Sources had cleared that Yes Bank the single largest shareholder in Fortis was also against the terms of the deal. HNI investors like Rakesh Jhunjhunwala, Radhakrishna Damani along with FIIs and mutual funds like East Bridge, Morgan Stanley, ICICI Prudential, and Blackrock are shareholders of Fortis.

At the end of Tuesday’s trading day, shares of Fortis closed at Rs 130 up by 1%.