Fortis to sell Malar Hospital, land, building in Chennai for Rs 128 crore to MGM Healthcare

Fortis Healthcare Ltd has announced the sale of Fortis Malar Hospital in Chennai, including its land and building assets, to MGM Healthcare Pvt Ltd for a sum exceeding Rs 128 crore. The regulatory filing disclosed that certain subsidiaries of Fortis Healthcare have entered into definitive agreements for the sale of business operations and assets related to Fortis Malar Hospital in Gandhi Nagar, Adyar, Chennai, to MGM Healthcare, a prominent healthcare service provider. The total sale amount is approximately Rs 128 crore.

The transaction encompasses the divestment of business operations from Fortis Malar Hospital, housed within the listed entity Fortis Malar Hospitals Ltd, where Fortis Healthcare holds a 62.7% equity stake. This includes the sale of OPD and radiology operations, along with the land and building of Fortis Malar Hospital and an adjacent land parcel, all held by Fortis Health Management Ltd (FHML), a wholly-owned subsidiary.

Additionally, the sale covers an adjacent land parcel used for parking, situated in Hospitalia Eastern Pvt Ltd (HEPL), another fully-owned subsidiary of Fortis Healthcare. Fortis Malar Hospitals Ltd had previously announced a definitive agreement for the sale of its business operations related to Fortis Malar Hospital to MGM Healthcare for about Rs 45.5 crore, expected to conclude by the end of January, subject to necessary approvals.

This divestment aligns with Fortis' ongoing strategy to optimize its portfolio by focusing on key geographic clusters where it has a substantial presence. Following the sale of Fortis Healthcare's Vadapalani facility in Chennai in July 2023, the decision to divest Fortis Malar Hospital, with approximately 140 beds, is attributed to legacy issues affecting the facility. Despite resolving several of these challenges, some persist, limiting further investments and prompting the strategic divestment to enhance overall profitability and margins in the hospital segment.

Fortis Healthcare's Managing Director & CEO, Ashutosh Raghuvanshi, emphasized the divestment as a prudent move to prioritize growth in other key markets and allocate capital judiciously. This divestment follows a similar move in the last two quarters, reinforcing the company's commitment to improving overall profitability.

Fortis Malar Hospitals Non-Executive Chairman, Daljit Singh, highlighted the proposed divestment as a practical solution for all stakeholders after careful deliberations among the management and the board.

For MGM Healthcare, the acquisition aligns with its strategy to expand its presence in Chennai, complementing its existing quaternary care hospitals and a greenfield hospital under development. MGM Healthcare's Managing Director, Prashanth Rajagopalan, sees the acquisition as a crucial step in their planned capacity expansion nationwide, aiming to provide quality, affordable, and personalized healthcare with a total bed count in Chennai reaching approximately 800 beds.

With inputs from PTI