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Home » World » Fortis’s Parent IHH Sued By Emqore For More Than 48 Cr Rupees

World

Fortis’s Parent IHH Sued By Emqore For More Than 48 Cr Rupees

IHH’s takeover of Fortis has been challenged by Japanese drug maker Daiichi Sankyo in a bid to recover an arbitration award of INR 3,600 crore (USD 471 million) from the Fortis founders in a fraud claim.

IHH Fortis's Parent healthcare company
IHH Fortis's Parent healthcare company

Singapore: In a stock exchange filing last week, Malaysian healthcare group IHH Healthcare Berhad (IHH) said that US fund Emqore Envesecure Private Capital Trust (Emqore) has filed a lawsuit against it and other defendants at the US District Court of New Jersey.

IHH acquired a 31 per cent controlling stake in Fortis Healthcare in 2018 following a prominent bidding war against domestic and international companies. Although this triggers a mandatory offer to bring its stake to 57 per cent by buying shares from the open market, this has not taken place due to legal proceedings pending in the Supreme Court of India.

IHH’s takeover of Fortis has been challenged by Japanese drug maker Daiichi Sankyo in a bid to recover an arbitration award of INR 3,600 crore (USD 471 million) from the Fortis founders in a fraud claim.

The next hearing is scheduled for February this year. Emqore is seeking, among others, damages in excess of USD 6.5 billion comprising compensatory damages plus treble damages and attorneys’ fees pursuant to the US Racketeer, Influenced and Corrupt Organizations Act.

Emqore’s claim against IHH essentially arises from allegations relating to the issuance of the shares of Fortis to IHH’s subsidiary in or around 2018. Emqore broadly alleges that it has purportedly suffered losses as the defendants had allegedly conspired to frustrate a proposed share acquisition transaction between Fortis and Emqore’s supposed predecessors.

The company said that it is not possible to determine the estimated potential liability to IHH arising from the suit, as it involves 28 named defendants and 20 non-party defendants. However, it said that the suit is not expected to have any business, operational or financial impact on IHH, as IHH believes that it has strong grounds for dismissal of the suit.

IHH further said that it will defend vigorously against the claims, and added, “it has strong grounds for seeking dismissal of Emqore’s claims and intends to file a Motion to Dismiss Emqore’s Amended Complaint on 3 principal grounds, namely, lack of personal jurisdiction, forum non-conveniens, and failure to state a claim for relief.” Emqore had initially filed the lawsuit in June 2020.

IHH was served in July last year with the original complaint and Emqore’s motion to amend it. The motion had been pending adjudication until December 3, when Emqore’s amended complaint was filed at the United States District Court. Malaysian healthcare group IHH which is publicly listed both in Singapore and Malaysia runs a total of 33 hospitals in India.

On December 14 last year, it announced that its indirect wholly-owned subsidiary, Gleneagles Development Pte Ltd, completed the divestment of its entire 62.2 per cent equity stake Hyderabad-based Continental Hospitals Private Limited to D Gurunath Reddy and affiliates, its partner shareholder in Continental Hospitals. IHH is the largest operator of private hospitals in Southeast Asia with 80 hospitals across 10 countries.

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Its key markets are Malaysia, Singapore, Turkey, India and Greater China (including Hong Kong). In Turkey, it is the majority shareholder of Acibadem Healthcare Group, the largest Turkish private healthcare company.

In Singapore it operates hospitals such as Gleneagles and Mount Elizabeth, and also runs the Parkway group of clinics, laboratory and diagnostic centres. Gleneagles also manages several hospitals in the southern part of India including Bengaluru and Chennai. In Malaysia, IHH owns the International Medical University in Kuala Lumpur, the Pantai group of hospitals and the Prince Court Medical Centre.

The major shareholders of IHH are Mitsui of Japan, Malaysia’s sovereign wealth fund Khazanah Nasional and Citigroup of the US. In the latest IHH results briefing for analysts on November 29, 2021, it reported sterling financial performance for Q3 with net income soaring 77 per cent to MYR 550 million (USD 131 million) compared with the same quarter in 2020. This was on the back of the steady return of patients to hospitals and the provision of COVID-19 support services.

Revenue was up 26 per cent to MYR 4.4 billion (USD 1.05 billion) and EBITDA (earnings before interest, tax, depreciation and amortisation) climbed 32 per cent to MYR 1.1 billion (USD 260 million). For its India operations, revenue grew 41 per cent to MYR 977.2 million (USD 232 million) on contribution from COVID-19 related services and healthy recovery of non-COVID inpatient admissions. EBITDA increased 102 per cent to MYR 180.8 million.

Inpatient admissions increased 29 per cent, revenue intensity increased 3.2 per cent as patients with more serious and urgent ailments sought treatment at its hospitals. For Q3 which ended in September, the average occupancy was at 66 per cent.

Last year, it reiterated its commitment to Fortis Healthcare and India despite the ongoing legal case related to its takeover of Fortis. “Growing in India remains a priority for IHH as it is one of our four home markets, together with Malaysia, Singapore and Turkey. We respect and have full faith in the judicial process in India and look forward to a favourable outcome so we can proceed with the open offer.

This will allow IHH to further invest into Fortis to provide even more support to the Indian healthcare sector, especially in critical times like now with COVID-19,” said CEO and Managing Director, Dr Kelvin Loh.

“Our focus, as the largest shareholder in Fortis, is to bring the best of our knowledge and expertise to help the Fortis leadership with the company’s continued turnaround and to deliver even more trusted, quality care for all our patients in India.”

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