Have raised S$510m through Religare Health Trust: Malvinder

Religare Health Trust, backed by Indian hospital chain Fortis Healthcare , has successful raised 510.7 million Singapore dollars (about Rs 2,260 crore)  in gross proceeds from its initial public offering (IPO) on the Singapore Exchange (SGX). Fortis has a 28% equity stake in Religare Health Trust, which owns 11 clinical establishments in India.

"Fortis Healthcare will get 510 million Singapore dollars and we will also get 28% equity interest in this listed company. We will use that money for strengthening our balance sheet and also for reducing our debt levels," Malvinder Singh, Chairman of Fortis Healthcare told CNBC-TV18 in an interview.

Singh expects the debt-equity to eventually come down to 0.5 times post infusion. "We expect growth to continue at 20% in the Indian market," he assured adding, the transaction will be EPS accretive for Fortis.

Below is an edited transcript of the interview.

Q: Can you take us through the stake sale that helped you raise 510 million Singapore dollars? Under what entity are you raising this money and what will you use it for? What is in it for investors?

 A: This has been in works for last two to two-and-a-half years -- creating a business trust, an asset-light model for a healthcare business. We have listed the Religare Health Trust where we have raised 510 million Singapore dollars. We have also retained 28 percent equity stake in this company, which we have just listed in the Singapore stock exchange.

Q: What does the trust own?

A: The business trust owns 11 clinical establishments in India: four greenfield hospitals and there are 17 properties that are a part of this structure.

Q: Will there be any kind of impact on the listed Indian entities on the back of this IPO?

A: Fortis Healthcare will get 510 million Singapore dollars and we will also get 28% equity interest in this listed company. We will use that money for strengthening our balance sheet and reducing our debt levels.

Q: How your debt levels will change after you infuse close to USD 500 million? Will the entire amount be used? What will the debt stand at?

A: The debt equity will be at 1:1 level. We have a USD 250 million preference capital put in by the family at the start of the year. So, if you take that as equity, which is a long-term nature of capital, our debt equity goes to 0.5. It's a very strong debt equity position in the company. It will enable us to grow in an asset like manner as we continue to expand our hospital business in India.

Q: How will this arithmetic impact your control over Fortis? Does it decrease promoter group's stake in Fortis?

A: No, Fortis is a listed company in India. This is a subsidiary of Fortis. And our shareholding is already sitting at 81%. Fortis will get the economic gain in terms of USD 510 million on its balance sheet. Thus, it will own a 28% in the listed company which is based in Singapore.