Over a month after the Supreme Court ruled in cases involving former promoters of Fortis Healthcare, top management of Fortis and Malaysia’s IHH Healthcare are hopeful of tying up the loose ends of the business deal between them.
“There is no order in the SC standing against the IHH,” Kelvin Loh, Managing Director and Chief Executive with IHH Healthcare Berhad, told businessline, of the SC ruling in September. They were now seeking clarification from the market regulator SEBI on proceeding with the mandatory open-offer for an additional 26 per cent in Fortis. The IHH acquisition of Fortis was done “in a fair, transparent manner, in compliance with all regulations,” Loh said.
Expressing confidence in the Indian judicial system, he added, “It has taken quite a while, that certainly has caused us some consternation. We are hopeful.”
In 2018, IHH Healthcare won the bid for Fortis in a long-fought battle. Having picked up 31 per cent stake in Fortis through a preferential allotment, IHH was mandated to make an open offer for another 26 per cent. But, the ₹4,000-crore deal ran into a challenge from Japanese drugmaker Daiichi Sankyo, which was locked in a legal battle with the Singh brothers — erstwhile promoters of drugmaker Ranbaxy, and then promoters of Fortis as well.
Fortis Chairman Ravi Rajagopal, explained further on the SC order: “It is both Fortis’ and IHH’s belief, arrived at independantly with the assistance of their external senior counsel, that the SC ruling has vacated all the petitions, which is a fact that was in the letter of the ruling and that automatically implied the vacation of the status quo order. And it is this belief and view of external counsels that IHH has presented to SEBI to consider, and seeking their concurrence to go ahead with the tender offer which had been stayed because of the proceedings back in December 2018.”
Forensic audit
The SC order in September, sentenced the Singh brothers to six months in jail. And, it asked the Delhi High Court to consider a forensic audit of transactions between Fortis and RHT Trust, (linked to the Singh brothers).
On whether the forensic audit would have a bearing on the open offer process, he clarified, the forensic audit was a matter for Fortis, not IHH. Hearings at the Delhi HC would commence on December 6, where all parties would submit on the need for forensic audit. “The SC suggested that the Delhi HC may consider the need for a forensic audit – it has not mandated it,” he added.
Fortis will argue saying, “we don’t see the need for a forensic audit, because of the various statements made by the SC in its ruling where they said prima facie there is a business case for the buy back of the assets and they were fairly satisfied with the nature and purpose of the transaction.” Besides, he added, “during the four years of the arguments by various parties, I don’t think any evidence has been produced which would suggest that something else was going on in the buy back of assets.”