Fortis adds muscle for Parkway battle

Fortis,controlled by Indian billionaire brothers Malvinder Singh and Shivinder Singh,is also in talks to hire RBS to help raise funds,said two sources with knowledge of the matter.

The sources,who also talked about Macquarie and Religare being hired,declined to be identified as the news is not yet public.

Parkway operates 16 hospitals across Singapore,Brunei,Malaysia,India and China. Its prized assets are Singapore hospitals,Gleneagles and Mount Elizabeth,whose patients include many wealthy businessmen and politicians from Asia,the Middle East and Russia.

Fortis Healthcare,which owns roughly 25 percent of Parkway,had wanted to build a controlling stake in the company before Khazanah made a surprise $835 million offer to lift its stake to 51.5 percent.

All these steps indicate Fortis is very aggressive about Parkway and is working towards arranging funds within the limited timeframe for the counterbid,said Sapna Jhawar,an analyst with Mumbai-based brokerage Sharekhan.

Under Singapore rules,Fortis will have to make a general offer for Parkway shares it does not own or a potential bid of more than $2.3 billion because it recently bought Parkway shares.

FUND RAISING

Malvinder Singh moved from New Delhi to Singapore as chairman of Parkway,a hospital chain he planned to use as a platform for global expansion.

Last week,Fortis unveiled plans to raise as much as $1.2 billion in equity and debt.

On Tuesday,in a statement to the stock exchange,Fortis said it would continue to evaluate its options and said the previously announced fund raising plans were merely enabling reolutions.

Parkway’s shares edged up 0.5 percent at S$3.79,above Khazanah’s offer price,while Fortis shares were little changed.

Khazanah is offering S$3.78 a share to double its stake in Parkway,valuing the entire company at S$4.27 billion ($3.06 billion).

Analysts said Fortis will have to offer a 6-10 percent premium over Khazanah’s offer to attract shareholders.

Citing its television channel ET Now,India’s Economic Times newspaper reported on Tuesday that a consortium of banks were willing to fund up to $1 billion.

Sources told Reuters that the banks’ mandate was to arrange debt and they are not involved in Fortis’ equity raising plans.

Fortis,Macquarie,RBS and Religare declined comment on the bank mandate.

A fund linked to Morgan Stanley recently bought Parkway shares for its clients above Khazanah’s offer price,fuelling speculation about a counter offer.

Morgan Stanley is also the independent financial adviser to Parkway. Deutsche Bank is advising Khazanah.

But not everyone is convinced Fortis will make a counter bid.

While we do not rule out a potential counter-bid offer,we maintain that Fortis would be hesitant to launch an outright general offer,given current valuation and the capital outlay involved,Su Tye Chua,a Singapore-based analyst at Credit Suisse said in a note on Tuesday.

The note said if Fortis gains control of Parkway through a potentially successful offer,it may cloud the Singapore company’s long-term strategy for the Malaysian market.

Parkway’s Malaysian operations,through a 40:60 stake with Khazanah in Pantai,currently generates about a quarter of Parkway’s revenues and almost a-third of its earnings before interest,tax,depreciation,amortisation and rent (EBITDAR). ($11.395 Singapore Dollar)