American private equity giant KKR & Co is discussing a Rs 3,000-crore financing deal with the holding company of the billionaire brothers, Shivinder and Malvinder Singh of Religare, to help them rejig the cash-strapped group, people directly familiar with the matter said.
The potential deal with RHC Holding Private, the parent of Religare and Fortis brands, could be a structured debt transaction with promoter shares in some group companies as collateral. “The discussions are underway and the exact contours of the transaction isn’t clear yet,“ said a person who did not wish to be named citing confidentiality norms. RHC Holding controls the promoter interest in Fortis Healthcare, Religare Enterprises, Religare Aviation, SRL, Dion Global Solutions and Religare Wellness among others.
The debt at the holding company is estimated at around Rs 5,000 crore, though this could not be independently confirmed.
The transaction, if it happens, would be similar to KKR’s promoter financing deal with Avantha Holdings, the parent of Gautam Thapar’s Avantha Group. Thapar, who took structured financing from private equity majors KKR and Apollo, restructured the group businesses, including the sale of Crompton Greaves’ consumer unit. The transaction involving structured debt gives the financier up sides on possible share price movements. The two main companies of Singh brothers, Religare Enterprises and Fortis Healthcare, have beaten down share prices.
When contacted, KKR declined to comment. Religare promoters did not return the call. RHC Holding and the promoters, who formerly owned Ranbaxy Laboratories, are facing a Singapore arbitration court order asking them to pay Rs 3,500 crore to Japan’s Daichii Sankyo for concealing certain facts while selling the pharma company for $2.4 billion a decade ago. The Singh brothers have appealed against the arbitration order.
The troubled siblings have been exploring various options, including sale of units at Religare Enterprises and spinning off SRL Diagnostics as part of the recent value unlocking moves. Last month, ET reported that the two brothers were also in talks to sell a 26% stake in India’s second-largest hospital chain Fortis Healthcare. The ongoing discussions between RHC Holding and KKR could also involve the latter buying into Fortis Healthcare now or at a later date, sources added.
In August last year, Fortis said it would hive off the diagnostics business into its existing publicly traded subsidiary Fortis Malar. The diagnostics businesses have attracted better valuations in recent past fueled by global investor interest in asset light pathology services market in Asia’s third-largest economy.
Source: Economic Times