Indian hospital operator Fortis Healthcare (FOHE.BO) said the Government of Singapore Investment Corp (GIC) had decided to defer a preferential investment but the sovereign wealth fund will evaluate participating in broader fund raising by Fortis. 

Controlled by Indian billionaire brothers Malvinder Singh and Shivinder Singh, Fortis is pitted against Malaysian state fund Khazanah for control of Parkway Holdings (PARM.SI).

 

Fortis will have to offer more than US$2.3 billion ($3.2 billion) to buy all of the Singapore-based hospital chain. 

 

Both Fortis and Khazanah want to use Parkway, which runs 16 hospitals across Asia including Singapore, Malaysia, India and China to spearhead their regional expansion into healthcare. 

 

In a statement on Friday, the Indian firm, which already holds roughly 25% of Parkway quoted GIC (GIC.UL) as saying it remains committed to Fortis through its substantial investment in Fortis’ convertible bonds. GIC declined comment beyond the statement by Fortis. 

 

Fortis had wanted to build a controlling stake in Parkway but Khazanah made a surprise US$835 million offer last month to lift its stake from 23.5% to 51.5%. 

 

“The statement doesn’t necessarily mean GIC is committed to the cause of Fortis,” said Ranjit Kapadia, an analyst at Mumbai-based HDFC Securities.  

 

“GIC may not be willing to pay a premium of 11% on the current market price of Fortis and that may have led to the deferment of allotment.”  

 

KEY ASSETS 

Parkway’s prized assets are Singapore hospitals, Gleneagles and Mount Elizabeth, whose patients include many wealthy businessmen and politicians. 

 

With a combined fortune estimated at US$3 billion by Forbes magazine — good for 17th place on its India rich list — the Singh brothers have the means and access to capital to take on the Malaysian fund if, as some expect, they choose to do so. 

 

Fortis had earlier agreed to allot shares worth 3.8 billion rupees ($114 million) to GIC.  

 

“It’s political. It would not look right if GIC is seen supporting Fortis when Khazanah is on the other side,” said a Singapore-based trader, who did not want to be named. 

 

He said the market does not think Fortis will make a counterbid, given the risk of Parkway losing its control over Malaysia’s Pantai, he added. 

 

By 0645 GMT, Fortis shares were down 0.9%, while Parkway shares were little changed. 

 

Most of Parkway’s operations in Malaysia are carried out via Pantai, in which it holds a 40% with the balance held by Khazanah. 

 

Pantai accounts for a quarter of Parkway’s revenue and almost one-third of earnings before interest, tax, depreciation, amortisation and rent, according to Credit Suisse. 

 

Khazanah launched a bid for Parkway a week after the leaders of Singapore and Malaysia agreed to resolve long-standing disputes over land and water that have plagued ties between the two countries for the past 20 years. 

 

Fortis also said it had approved the conversion of warrants into shares totaling 13.42 billion rupees. These warrants were issued last year with a rights issue.  

 

Singapore’s securities regulator has given Fortis until July 30 to say whether it intends to make a full offer for Parkway.