Fortis in $3.1bn bid for Parkway

Malaysia’s sovereign wealth fund is expected to raise its partial takeover offer for Singapore’s Parkway Holdings after India’s Fortis Healthcare launched a rival takeover bid valuing the company at $3.1bn.

The Indian move pits Parkway’s two biggest shareholders in a battle for control that reflects interest in private healthcare facilities in Asia, where rising incomes are driving growth in medical tourism.

The battle for the hospital chain comes after Fortis’s $685m acquisition in March of a 23.9 per cent stake in Parkway from TPG, the US private equity group.

The Fortis stake was later raised to 25 per cent.

Khazanah, the Malaysian state investment agency, has a 23.3 per cent stake, but was angered by an arrangement under which Fortis took control of the board through an agreement with three directors.

Khazanah last month offered S$3.78 a share for enough shares to give it a 51 per cent holding, valuing the group at just less than $3bn.

The offer was described in a report to the board by Morgan Stanley as “not compelling”.

Fortis, India’s leading domestic hospital operator, on Thursday offered to buy all outstanding shares for S$3.80 a share, sparking speculation that Khazanah would raise its offer rather than see the Indian group consolidate control.

Lynette Tan, analyst at DMG Partners Securities, said: “They [Khazanah] are unlikely to accept this and I think they will want to counter-offer.”

There was no comment from Kuala Lumpur-based Khazanah.

Parkway shares closed at S$3.57 on Wednesday, but were suspended from trading on Thursday.

Fortis, owned by Malv-inder and Shivinder Singh, will have to pay S$3.2bn ($2.3bn) for the outstanding shares it does not own.

After the deal in March, Malvinder Singh took over as chairman of Parkway, and Fortis was allocated four directors on the 13-member board excluding alternates.

The Morgan Stanley report disclosed Fortis’s formal arrangement with three other directors giving it “the right to direct” how they vote in return for “certain economic benefits”.

The deal did not breach Singapore’s corporate governance code but annoyed Khazanah as it allowed Fortis to control Parkway with a quarter of the shares.