SINGAPORE (July 13): Dr Tan See Leng, managing director and CEO of IHH Healthcare, is in a buoyant mood. And he deserves to be.

After a long-drawn takeover battle that has stretched for months, Malaysia-based IHH today emerged victorious as it was announced as the preferred bidder to acquire a controlling stake in Fortis Healthcare, India’s second-largest hospital chain.

“We did not compromise on our ideals and principles,” Tan tells The Edge Singapore in an exclusive interview. “We had insisted all along that we needed to have due diligence and we asked them to open the books.”

The way Tan sees it, there is a certain value in the asset. And it is only after being allowed to conduct this due diligence to identify the pitfalls and potential potholes that IHH can “bring [Fortis] back to its greatness”.

Through wholly-owned subsidiary Northern TK Ventures, IHH has entered into a share subscription agreement with Fortis for 40 billion rupees ($796 million) through a preferential allotment of shares at 170 rupees a share – a 20% premium to Fortis’ closing price on Thursday.

Following the preferential allotment, IHH be become the largest shareholder in Fortis, with a 31.1% stake.

This will trigger a requirement for IHH to make a mandatory open offer to Fortis shareholders for 26% of the outstanding shares for at least 170 Indian rupees per share. The open offer will work out to about 33.5 billion rupees in total.

IHH will also offer to acquire 26% equity interest in Fortis’ listed subsidiary, Fortis Malar Hospital, at an offer price of 58 rupees per share.

In a filing to SGX on Friday, IHH says the proposed acquisitions represent an opportunity for the group to  further expand its growth footprint in India, given the country’s tremendous growth potential.

It is expected to propel IHH to become a leading Pan-Indian hospital operator, operating more than 5,400 beds in 37 hospitals.

IHH currently operates a network of 1,600 beds across six hospitals and three medical centres in India, where it has had an operating presence since 2002.

While IHH has jostled its way into prime position in one of the world’s most under-served healthcare markets, Tan knows the war is far from over.

IHH now has its work cut out, as it must work to turn around Fortis’ three straight quarters of losses, as well as investigations into “systematic lapses” and alleged fraud at the company.

The bidding war for cash-strapped Fortis was sparked off earlier this year after its founders, brothers Malvinder and Shivinder Singh, lost their shareholding due to debt. The pair are also alleged to have had improperly taken funds from the company.

“Today, we have to go in and stabilise the ship first. What is now sorely needed is equity infusion in terms of funds. At the same time, they also need crystal clear direction as to what needs to be done next and who’s going to drive and operate the asset,” Tan says.

“The last 16 months was a learning process for us,” he adds. “We learned about the company; you learn what to do, but I think the more important lesson is you learn what not to do. And in the learning of what not to do, you are also building your own expertise. We are also building our own management team in that period of time.”

Shares of IHH closed 1 cent higher at $2.02 on Friday.