IHH Healthcare, the Singapore-Malaysia-based hospital group that operates a chain of hospitals under Fortis and Gleneagles (erstwhile Global Hospitals) brands in India, is planning to double its bed capacity here to 10,000 beds in next 4-5 years through both brownfield expansion and acquisitions. IHH Healthcare has around 5,000 bed capacity in India under Fortis and Gleneagles and plans to add 2,000 beds through brownfield expansion, and another 3,000 beds through possible acquisition opportunities.
Prem Kumar Nair, group CEO of IHH Healthcare, in an interview to ET said the funding is not a constraint. “We have headroom (for acquisitions),” Nair said. “The brownfield expansion will be done through internal accruals and will immediately improve our operating leverage,” he added. Nair added that IHH aspires to be among the top three healthcare providers in India and plans to expand into tier-2 cities beyond metros. India was the fourth largest market that contributied around 17% of IHH Healthcare Group’s revenues of 21.3 billion Malaysian Ringgit (₹42,271 crore) in 2023.
Nair said IHH will continue its dual brand strategy in India, operating hospitals under Fortis and Gleneagles, while it integrates the backend operations such as IT and procurement for better efficiencies.
“Fortis will be focusing on the north and Gleneagles on the south to leverage market opportunities,” he added. On consolidating operations of Fortis and Gleneagles into single listed entity, Nair said the company is awaiting the resolution of pending legal issues in the courts including a case by Daichii Sankyo. IHH expanded in India through acquisitions when it acquired 73.4% stake in Global Hospital for ₹1,284 crore in 2015. In November 2018, it bought 31.17% stake in fledgling Fortis through an auction process run by the then Fortis board. IHH has to make a mandatory open offer to buy an additional 26.1% stake in Fortis, but the offer was delayed due to litigation. IHH was able to successfully turnaround Fortis by March quarter 2022.
“We are engaged with regulators (over open offer),” said Ashok Pandit, the group chief corporate officer of IHH. Lately, while the hospital sector has witnessed large acquisitions driven by PE investors, IHH has been out of action on that front. The group was more focused on consolidating its acquisitions in India, acquiring full ownership Global Hospital’s’ remaining stake held by Ravindranath GE Medical Associates (RGE) in August 2023 for around ₹740 crore.
Fortis Health also acquired a 31% stake held by PE players in its diagnostic arm Agilus Diagnostics for ₹1,780 crore that values Agilus at ₹5,700 crore. Nair said he is bullish on India led by favourable trends for private healthcare such as large middle-class population, rising income, higher insurance penetration, younger demographics and high chronic disease burden.
