Shares of Fortis Healthcare Ltd surged over 6% on Monday, October 6, after IHH Healthcare Berhad finally received approval from the Securities and Exchange Board of India (SEBI) to go ahead with its open offer to increase its stake in the hospital chain by another 26%.
This long-awaited approval comes seven years after IHH first bought a 31.1% stake in Fortis Healthcare in 2018, marking a major development in one of India’s most high-profile healthcare investments.
IHH Healthcare gets a green signal after seven years
Malaysia-based IHH Healthcare had acquired a 31.1% stake in Fortis Healthcare for ₹4,000 crore in 2018. The company had then planned an open offer to acquire an additional 26% stake worth ₹3,300 crore, scheduled between December 18, 2018, and January 1, 2019.
However, the open offer was halted due to legal hurdles, primarily stemming from disputes involving Daiichi Sankyo and former Fortis promoters Malvinder and Shivinder Singh, which reached the Supreme Court of India.
After years of legal proceedings, IHH announced in September 2022 that the Supreme Court had paved the way for the open offer, subject to SEBI’s final approval. That approval has now arrived, clearing the path for IHH to proceed with its plan.
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Fortis shares hit new highs on optimism
Following the news, Fortis Healthcare shares climbed 6% intraday to ₹1,037.5, reflecting renewed investor confidence. The stock has also gained around 7% in the past month, driven by both regulatory clarity and broader optimism in the healthcare sector.
At present, Fortis’ current market price of ₹980 per share is nearly 4.7 times higher than in 2018, when IHH first announced its open offer at ₹170 per share.
Given the current valuation, the open offer size now stands at approximately ₹19,308 crore, highlighting the steep rise in Fortis’ market capitalization and the value of IHH’s potential acquisition.
Fortis awaits details on pricing and timeline
While SEBI’s nod marks a significant milestone, Fortis Healthcare is awaiting detailed communication from IHH and the regulator to finalize the pricing and the offer timeline.
Once the necessary information is received, clarity on the open offer’s financial structure and share price is expected in the coming days, according to people familiar with the matter.
Revamp in CGHS scheme adds to momentum
Analysts believe that the stock’s rally is not just driven by the open offer approval. The government’s first major revamp of the Central Government Health Services (CGHS) scheme since 2014 has also boosted sentiment in the healthcare sector.
The move is expected to increase healthcare spending and hospital utilization, which may benefit established hospital chains like Fortis Healthcare.
A long journey toward resolution
The SEBI approval ends a seven-year wait for IHH Healthcare, which had faced numerous legal challenges since acquiring its initial stake in 2018.
The open offer’s delay had created uncertainty around IHH’s future plans for Fortis. With the regulatory and legal roadblocks now largely cleared, the development opens the door for IHH to strengthen its control over one of India’s leading private hospital networks.
Investor sentiment turns positive
Market experts view this as a positive development for Fortis shareholders, as IHH’s deeper involvement could bring more operational stability and long-term growth.
“The SEBI approval provides long-awaited clarity and reinforces investor confidence in Fortis Healthcare’s future,” said a market participant aware of the situation.
Fortis shares are likely to remain in focus in the coming sessions as investors await further details about the offer price and subscription period.
Summary
The SEBI’s green signal to IHH Healthcare’s open offer marks the end of a long-standing legal battle and a new phase for Fortis Healthcare. With its share price soaring nearly fivefold since 2018, Fortis stands stronger in the healthcare space today.
Investors are optimistic that IHH’s expanded stake could accelerate growth, strengthen governance, and enhance Fortis’ position as a leading healthcare provider in India.
