Fortis Healthcare seeks Rs997 crore through rights issue

Fortis Healthcare, which operates a chain of 28 hospitals across the country, hopes to raise Rs997 crore through a two-for-five rights share issue for funding its upcoming projects and for future investment, among other purposes.

Delhi-based Fortis, the country's second-largest health provider, will issue two shares on a rights basis for every five shares held, and subscribers to the issue will also be entitled to two detachable warrants for every two rights shares allotted.

The company has decided to price the rights issue at Rs110 per share, comprising Rs10 as the face value and 100 as premium. The record date has been fixed for 20 August 2009 for the rights issue, with the issue poised to open in the first fortnight of September 2009.

Fortis said it would use the proceeds to fund greenfield projects, including its upcoming project in Gurgaon, as well as redemption of preference shares, repayment of short-term debt, upgrading existing units and for future investment opportunities.

In April, The Ranbaxy family-promoted Fortis said that it would invest around Rs2,500 crore to expand its network to 40 hospitals and almost double its capacity to 6,000 beds by 2012, despite the economic slowdown. (See: Fortis investing Rs2,500 crore to expand network, double capacity)

Fortis is following a strategy of investing in hospital ventures of industry groups where healthcare is not the core business. The company acquired 48.83 per cent stake in Chennai-based Malar Hospital last year and announced the launch of Fortis Hospital Seshadripuram (formerly Apollo RM Hospital) in Bengaluru this year as part of its plan to expand its footprint in the south and the west.