Shares of Parkway Holdings (PARM.SI) rose as much as 8.4% on Friday, slightly above the price offered by two rival bids for the Singapore-based hospital operator, as investors expected a bidding war to ensue. 

India’s Fortis Healthcare (FOHE.BO) and its founding family launched a $3.80-a-share bid for Parkway on Thursday, valuing Asia’s biggest hospital group at US$3.1 billion ($4.3 billion) topping a rival $3.78-a-share offer by Malaysian state fund Khazanah. 

 

By the midday break, Parkway shares were at $3.85, with nearly 4.4 million shares changing hands, 60% higher than the 90-day average volume. The shares hit an intra-day high of $3.87. The stock was suspended on Thursday. 

 

"Parkway’s shares have surged as investors are hoping that Khazanah will make another offer now," Lynette Tan, an analyst at DMG & Partners Securities said. 

 

"Khazanah and Fortis have pretty good synergistic opportunities with Parkway as both Malaysia and India have growing medical tourism and healthcare markets," Tan added. 

 

Both Fortis and Khazanah want to use Parkway, which runs 16 hospitals in Singapore, Malaysia, India and China, to spearhead their regional expansion in the booming healthcare market. 

 

Parkway’s prized assets are Singapore hospitals Gleneagles and Mount Elizabeth, whose patients include business leaders and politicians from the region.  

 

Fortis, which controls just over 25% of Parkway, had intended to build a controlling stake in the firm before Khazanah made a surprise US$835 million partial offer in May to lift its stake to 51.5% from around 24%.

 

Moh Tze Yang, an analyst at SIAS Research said he is cautious about Fortis’ ability to secure the necessary funding if it manages to win the bid for Parkway. 

 

Fortis has lined up a one-year bridge loan of US$1.5 billion to back its open offer, according to a banking source. The loan, to be backed by shares of Parkway, is spearheaded by Axis Bank. Royal Bank of Scotland and ING Bank are also working on separate financing for Fortis. 

 

Last week, Fortis said the Government of Singapore Investment Corp (GIC) had decided to defer a preferential investment but the sovereign wealth fund would evaluate participating in broader fund raising by Fortis. GIC holds Fortis convertible bonds.

 

Fortis shares were off 0.3% on Friday on the Bombay exchange.