The Fortis board is expected to meet next week to appoint representatives from IHH on the board, two people aware of the matter said.
Singh’s resignation clears the way for IHH to bring in its own candidate to run Fortis Healthcare once the Malaysian group formally takes control.
Following approval from the Indian antitrust regulator on 30 October, IHH will now buy a controlling stake in India’s second-largest hospital chain by infusing around ?4,000 crore. It will subsequently offer to buy an additional 26% from public shareholders through an open offer.
“The preferential allotment of shares will be confirmed in the upcoming meeting,” one of the two people cited above said, requesting anonymity.
The meeting will also see the board making decisions on liquidity requirements of the company, including issues such as dispensing salaries and payments to vendors, maintenance of equipment and infrastructure upgrades. IHH will have the right to nominate directors constituting two-thirds of the board after the infusion of funds into Fortis.
“They will have to broaden the board, taking more members of the new promoters,” said Shriram Subramanian, founder and managing director of proxy firm InGovern Research.
In July, the Fortis board unanimously accepted the binding offer from IHH Healthcare, bringing the curtains down on a bidding war for the beleaguered hospital operator. The board of Fortis Healthcare approved a binding investment proposal from IHH to invest ?4,000 crore by way of preferential allotment for a 31.1% stake, valuing the cash-strapped firm at ?8,880 crore.
The money infused through the deal is expected to meet Fortis’s immediate and long-term liquidity requirements, including acquiring assets from Singapore-based Religare Health Trust (RHT) and providing an exit to private equity investors in SRL Diagnostics, Fortis’s diagnostic arm. “Majority of the amount is going to RHT in relation to proposed disposal of the entire portfolio of RHT,” said the second person on condition of anonymity.
Doctors working at Fortis Healthcare were informed about Singh’s resignation in a conference call on Thursday evening. Singh said the challenges at the company over the past couple of years had not allowed him to spend time with his family. “I believe that the right time for me to make this transition is now. After two very challenging years, the company is now on a stable platform and can look forward to the future with optimism,” he said a statement.
“I am very pleased that business recovery is well under way with solid improvement demonstrated during Q2 and with October results reflecting the best performance we have had in the past 12 months. So, with the turbulence behind us, the business once again looking up, and with IHH poised to take over the reins at Fortis as a majority shareholder in the coming weeks, the time for me to transition is now,” he said in the statement.
The Fortis board has accepted his resignation, the firm said in a stock exchange filing. “Singh will continue in his current capacity till Fortis finds his successor.”
Singh is the third top executive to resign after IHH won the bidding war. Chief financial officer Gagandeep Singh Bedi resigned in August. Company secretary Rahul Ranjan quit in October.
Fortis Healthcare chairman Ravi Rajagopal said: “Bhavdeep has been a pillar of strength at Fortis and has steadfastly led from the front. He has consistently demonstrated a high level of business acumen, an exceptionally strong work ethic and a very strong commitment towards building and sustaining strong people relationships built on a strong foundation of trust. However, his overwhelming involvement and commitment to support the company these past years had not allowed him sufficient time with his family. The company is standing strong today because of the leadership displayed by Bhavdeep.”