Fortis Healthcare To Sell Assets Yet Again

As per a leading daily, Fortis Healthcare may sell its Hong Kong and Vietnam-based arms for USD 380-400 million. As per the report, the company has already received a bid of USD 80 million for its Vietnamese hospital arm, which is in the final stages of negotiation.

The company has been selling its assets for some time now, and we don’t see this as the right move. It has recently sold its stake in Dental Corporation of Australia for USD 263 million. Before the stake sale in Dental Corporation, the company listed its healthcare arm on the Singapore Stock Exchange. This helped the company to free up capital, which it intends to use to reduce its debt.

Fortis Healthcare holds 65% stake in Fortis Hoan My Corporation, its Vietnamese unit. Its Hong Kong arm Quality Healthcare would also be sold and it is seeing interest from investors.

The company had acquired these assets when it bought the Singapore-based Fortis Healthcare International Pte, the entity promoted by its promoters but not treated as a group entity, for USD 665 million. In less than two years after the acquisition, the company is seeing selling these assets, hinting that it is not seeing any potential in these assets. A spokesperson of Fortis Healthcare is quoted as having said, “Fortis will recover its investment made in 2011 to foray into international markets. Fortis will retain its presence in Singapore, Mauritius, Sri Lanka and Duba”.

A good question to ask here is why these big ticket acquisitions were made in the first place?

For the current shareholders, there is not much in this counter. In fact, the company has consistently eroded shareholders’ wealth. Its current promoters have received bad publicity as their former company Ranbaxy pleaded guilty before the US Department of Justice for certain US FDA-related compliance issues. We remain strongly bearish on the stock and advise investors not to enter the counter.