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Singhs had nothing to do with Fortis when IHH invested in it: Rakesh Jhunjhunwala

Ace stock market investor says IHH Healthcare's open offer for Fortis is fair and should be allowed.

, ET Bureau|
Updated: Dec 09, 2019, 08.30 AM IST
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NEW DELHI: Ace stock market investor and Fortis’ largest individual shareholder Rakesh Jhunjhunwala has endorsed Malaysian company IHH Healthcare’s Rs. 4,000-crore investment in the hospital chain after a recent Supreme Court ruling placed the deal under a cloud.

While voicing shareholders’ concerns over delays in IHH’s planned open offer for Fortis, Jhunjhunwala emphasised the deal was “fair” and that IHH should complete the open offer that has been pending for a year.

"Malvinder and Shivinder had nothing to do with Fortis when IHH invested in the company. IHH was chosen after a fair bidding process," Jhunjhunwala said while responding to questions around the delay in IHH’s open offer to Fortis’ shareholders.

The apex court has ordered that status quo be maintained on IHH’s 31% shareholding in Fortis, which it formally acquired on November 13 last year while holding the Singh brothers guilty of contempt of court in an ongoing dispute involving them and Japanese drug maker Daiichi Sankyo.

IHH has been unable to proceed with its open offer to acquire a further 26% stake from minority shareholders of Fortis as a result of the status quo. “IHH was chosen by an independent board and approved by the shareholders.

No shares were purchased from Malvinder and Shivinder. All the money came into Fortis,” Jhunjhunwala said, stressing that several parties were given an offer to bid for the company. “The open offer should be completed as per Sebi norms,” he demanded. The apex court on November 15 held the Singhs guilty of “wilfully” disobeying its orders. The court noted that the Singh’s shareholding in Fortis had vanished into “thin air” despite their assurances to the court that they would maintain a certain level of shareholding in Fortis to cover any sum required to fulfil Daiichi Sankyo’s claims if the latter won the dispute.

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The Singhs owned half a per cent in Fortis by the time the IHH deal happened. The Singh’s have attributed the drop in their shareholding to a ruling on February 15 last year, where court lifted restriction on sale of encumbered Fortis shares, allowing financial creditors to whom such shares were pledged to sell them and recover dues.

Jhunjhunwala owns a 1.6% stake in Fortis Healthcare in his individual capacity as per latest available stock exchange filings.

The Supreme Court has simultaneously directed the registration of a contempt petition against Fortis terming the transfer of funds from Fortis to purchase units of Singapore-listed RHT Health Trust (RHT) “dubious and clandestine.” The apex court noted that the Singh’s “were at one time the biggest unit holders in the trust.” RHT’s units were acquired with the funds infused by IHH into Fortis. “The company’s financial performance is improving every day,” Jhunjhunwala said when posed with questions on the merits of the RHT deal.

RHT was floated seven years ago as an offshore vehicle where assets and infrastructure of Fortis were carved out and parked in to the Singapore-registered entity. Fortis had been paying hospital services fee of Rs 1 crore daily to RHT before the units were bought out, according to sources.

The Singh brothers in their individual capacity and through an arm of Fortis owned nearly 29% of RHT as of June 30, 2017. Fortis has maintained that to its knowledge the Singh’s did not own any units in RHT when the deal to buy out the trust took place. Daiichi has been fighting to enforce a Rs. 3,500-crore arbitiration award that they won against the Singh brothers at a tribunal in Singapore over their acquisition of Ranbaxy, a company previously controlled by the Singhs.

Daiichi has claimed the Singh brothers concealed critical information about the company from them at the time of its sale. The Singhs deny any wrongdoing.

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