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Proxy advisors are giving a thumbs up to Kerala-based PTL Enterprises’ proposal to de-merge its NCR-based hospital business into a separate entity, Artemis Global Life Sciences. PTL Enterprises is owned by the Kanwar family, the promoter of Apollo Tyres.
A court-convened meeting of equity shareholders of PTL Enterprises is scheduled for July 4 to vote on the demerger.
Shriram Subramanian, MD, InGovern, said: “The shareholding pattern will continue to be the same once the hospital chain is spun off. This way, the value of Artemis will be discovered. Shareholders, at this juncture, should not have any issues with the demerger.”
JN Gupta, MD, of Stakeholder Empowerment Services, echoed this view, saying shareholders should vote in favour of the move, as the equity structure will be mirrored in the demerged entity.
This is PTL’s second attempt at spinning off the lucrative hospital business into a separate entity.
In 2014, PTL’s management had tried an outright sale of Artemis to a private company owned by the same promoter group for a total consideration of ₹202 crore, while another proxy advisory Institutional Investor Advisory Services, had in a report valued the hospital business then at a minimum valuation of ₹830 crore.
Minority investors, at the time, particularly the Kerala government, protested the sale of the two hospitals at such a low price to an entity related to the promoter. The company was ultimately forced to shelve the sale because of this opposition even though related party transactions at the time did not require the approval of minority shareholders.
The new demerger proposal is a win for minority shareholders, Subramanian said, a proposal, he suspects, resulting from investor activism the first time around. “At the time, there was a lot of opposition from the shareholders who took the promoters to court. From that perspective, I think this is the right strategy for the management. They are arriving at the value (of Artemis) the right way.”
The two Artemis hospitals in NCR, in fact, make up the bulk of the valuation for PTL. For PTL itself, the main source of revenue is rental income from a lease of 31 acres of land in central Kochi to Apollo tyres.
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