Malaysian hospital chain IHH Healthcare, which won the bid for debt-ridden FortisNSE -0.47 % Healthcare, will sell its 50 per cent stake in Apollo Gleneagles Hospitals in Kolkata and its radiology centre in Hyderabad to its joint venture partner to abide with a non-compete agreement, people with knowledge of the plan said.
“According to the agreement, any partner who purchases stake in a rival hospital will have to sell their stake to the other partner,” one person said. “The IHH acquisition of Fortis for $1.1 billion triggers this clause in the agreement.” Apollo Gleneagles is a joint venture between Apollo Hospitals and Parkway Pantai, a subsidiary of IHH.
Apollo has the first right of refusal over the stake held by its partner. “We will not comment on market speculation,” an IHH spokesperson said. Apollo Hospitals did not respond to an emailed questionnaire on the matter. However, a senior official told ET it was waiting to hear from the Malaysian company.
“IHH has to come to us with an offer. We have not got any indication on how they plan to move forward with this,” the official said, asking not to be identified due to the sensitivity of the issue.
Apollo has begun to raise resources to fund the acquisition of IHH’s stake. The company is in advanced talks to sell unit Apollo Munich Health Insurance to HDFC Ltd., the country’s largest mortgage lender, at a valuation of Rs 1,000 crore.
HDFC has a partnership with ERGO International AG, part of the Munich Re Group, in the general insurance space. HDFC has a 51 per cent stake in the venture and ERGO holds 49 per cent. Arpwood Capital, which helped HDFC ERGO General Insurance to buy L&T General Insurance Company Ltd., is the exclusive advisor to the deal.
