Private equity firm KKR backed Radiant Hospital, one of the bidders for FortisNSE 4.66 % Hospital, on Tuesday, said it won’t be revising its bid before completing the due diligence. Tuesday was the deadline for submitting the binding bids for Fortis. Abhay Soi, MD Radiant in an exclusive interview to ET said that it will infuse cash into the company by purchasing single asset, and this binding offer can precede post due diligence offers. Soi also accused the Board of not running a fair bidding process. An excerpt from the interview.
IHH and Munjal-Barman’s have revised their bid for Fortis, will you also do that?
We are seeking a fair and transparent bidding process as we believe the best suitor and highest value can only emerge post that. At present everyone is presuming the worst and baking that in. It doesn’t necessarily have to be the case. Where is the question of revising the offer. We can only look at revising our offer post diligence. Our proposal seeks an opportunity to put our best foot forward post a short due diligence, however, if the company is in need of urgent cash infusion, we are prepared to create liquidity for the company through purchase of a single asset.
What do you think of the bidding process?
I don’t think the board is running a process at all. A process is when all suitors are provided a level playing field and given a chance to at least put forth their case. Subsequent to the company insisting on only entertaining binding bids, we put forth one. Now the company has disclosed that there is a right of first refusal by one of the bidders. In addition, while a committee nominated by the erstwhile board has been appointed, the board is reserving its rights to abide by its suggestions. Moreover, we are yet to hear from the company as to whom we should engage with.
What should be done to run a fair process?
It’s simple. Allow all suitors to conduct a due diligence and then put their best proposals forward. This way value is likely to be maximised for shareholders because of the informed competitiveness it would lead to. In the meantime, if you require cash due to some burning requirement, then either raise debt or monetise an asset. The current construct of a party putting in primary capital and getting board seats before diligence in itself jeopardizes an unbiased process by giving that party an unfair advantage in the process which in turn could prevent value maximization for shareholders. Also other strategic investors are unlikely to participate thereafter. In order to run a fair process an independent, credible and reputed bulge bracket firm should be engaged to determine the best proposal post a diligence. Their recommendation should be forwarded in its entirety by the board to shareholders for acceptance or rejection.
