Minority shareholders of Fortis Healthcare, comprising nearly 50% of the company’s shareholding, will now have representation on the hospital’s Board. The names of three additional independent directors recommeded by them have received management’s invitation. The three members invited on the Board are Suvalaxmi Chakraborty, Ravi Rajagopal and Indrajit Banerjee.

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The minority shareholders have been opposing the bid of TPG Capital-backed Maniptal Healthcare Enterprises (MHE) citing the offer to be undervalued. Appointment of these three independent directors was pressed by National Westminster Bank Plc (trustee of Jupiter India Fund), East Bridge Capital Master Fund Ltd and East Bridge Capital Master Fund I Ltd.

These Funds, which together hold 12.04% stake in Fortis Healthcare, had also sought for an extra-ordinary General Meeting for the removal of existing Board members — Brian Tempest, Harpal Singh, Sabina Vaisoha and Lt. Gen. Tejinder Singh Shergill.

Fortis is amidst a bidding war. 

Last week, the Board formed an advisory panel to look into “binding offers” of MHE-TPG and Hero Enterprise Investment Office-Burman Family Office that do not require due diligence.

The committee was headed by PricewaterhouseCoopers’ former Chairman-CEO, Renuka Ramnath, ex-MD & CEO of ICICI Venture, and Lalit Bhasin, president, Society of Indian Law Firms & Managing Partner, Bhasin & Co. On Wednesday, Ramnath resigned from the panel citing “pre-occupation”.

However, it is believed that her resignation was due to Sunil Kant Munjal’s investment in Multiples PE headed by the former.

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The Board is yet to decide the replacement for Ramnath and the meeting has been re-convened today.

On the invitation for three independent directors, people closely tracking the M&A of Fortis Healthcare told DNA Money that with this move the prospect of Malaysian IHH Healthcare Berhad coming up with a hostile offer via minority shareholders reduces. The three newly introduced directors would discuss with the Board on how, despite double revision, MHE’s offer continues to be lesser than it’s competitors.

As a result, there is a possibility of MHE once again “sweetening” its bid to match the IHH Healthcare’s offer in order to try and nudge them out of the fray. In other words, the race for Fortis Healthcare is likely to gain further traction and action.

“Once these three independent directors join the Board, the Singh brothers’ influence on the Board will get diluted and benefit the shareholders at large,” said another person. In February, Malvinder Mohan Singh and Shivinder Mohan Singh stepped out of Fortis Healthcare’s Board.

By Ateeq Shaikh, DNA Money