Malaysia’s IHH Healthcare, which operates hospital networks under the Fortis and Gleneagles brands, has no plans to list its diagnostics arm Agilus Diagnostics, a Fortis subsidiary, senior company officials said.
In fact, the company considers diagnostic services (or the laboratory business), which currently contributes around 7 to 10 per cent of IHH’s global turnover, as ‘integral’ to its operations in any country.
“We have large healthcare delivery service organisations in all the countries where we operate, like Singapore, Malaysia, etc. We have the top lab in the country in three countries – Singapore, Malaysia, and Turkey – to support our operations. We feel in India we need a reliable laboratory to support Fortis and Gleneagles growth,” said Prem Kumar Nair, group chief executive officer, IHH Healthcare.
“We are not thinking of an IPO or anything at the moment,” he added.
Recently, Fortis Healthcare acquired a 31 per cent stake held by private equity players in Agilus Diagnostics for Rs 1,780 crore, a deal that valued Agilus at Rs 5,700 crore.
Agilus is planning to expand its footprint (currently 400 labs and around 4,000 collection touchpoints). It is open to inorganic expansion in India as well. Ashok Pandit, group chief corporate officer, IHH Healthcare, said it has enough cash on its books and is well capitalised. As of August 31, it has Rs 270 crore cash on its books.
IHH plans to grow its laboratory business vertical (IHH Laboratories) globally. It aims to focus more on higher-end tests like oncology work, genomics tests, molecular genetics, precision medicines, etc.
IHH eyes top 3 hospital position in India:
The Malaysian major is planning to double its bed capacity in India to 10,000 in the next few years, Nair said, adding that of this, around 2,000 beds would come through brownfield expansion in the next 4–5 years. At present, IHH operates over 5,000 beds in India under Fortis and Gleneagles. Fortis would add close to 2,000 beds, and Gleneagles will add another 600 beds. Globally, IHH has announced plans to add 4,000 beds organically over the next few years, of which more than 50 per cent are likely to be in India.
Another 3,000 beds would eventually come through possible acquisitions, where the company is looking at assets in its core markets, which are strategically aligned with its current operations, and from a returns perspective, are EPS-positive in two to three years.
Nair clarified that Fortis can fund its growth plans from internal accruals.
India is among the top markets globally for IHH, and according to its second-quarter results presentation, it contributes 17 per cent to its global revenues and 13.7 per cent to Ebitda as of H1 2024 calendar.
Decision on revised open offer price depends on discussions with regulators:
IHH had bought a 31.7 per cent stake in the then struggling Fortis Healthcare in 2018 and had plans to make an open offer at Rs 170 per share to acquire another 26.1 per cent. This, however, has been delayed due to litigation. Shares of Fortis Healthcare have more than tripled in the last six years, currently trading at levels above Rs 600.
Pandit said, “Let’s wait and see where we end up. But we are very happy with where the Fortis stock price is.” He added that they are engaging with the regulator over the open offer.
Recently, it acquired full ownership of Global Hospitals’ remaining stake held by Ravindranath GE Medical Associates (RGE) for around Rs 740 crore. It had acquired a 73.4 per cent stake in Global Hospital for Rs 1,284 crore in 2015.
For now, IHH will continue with a dual-brand strategy in India.
First Published: Sep 26 2024 | 7:21 PM IST
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