UPDATE 2-GIC defers preferential funding in India's Fortis

* GIC will evaluate broader fund raising
participation-Fortis * Fortis pitted against Khazanah for
control of Parkway

* Fortis needs to offer over $2.3 bln to buy all of
Parkway

(Adds trader comment, background in para 7-11, share price)

By Sanjeev Choudhary and Kevin Lim

NEW DELHI/SINGAPORE, June 25 (Reuters) - Indian hospital
operator Fortis Healthcare (FOHE.BO) said the Government of
Singapore Investment Corp (GIC) had decided to defer a
preferential investment but the sovereign wealth fund will
evaluate participating in broader fund raising by Fortis.

Controlled by Indian billionaire brothers Malvinder Singh
and Shivinder Singh, Fortis is pitted against Malaysian state
fund Khazanah for control of Parkway Holdings PARM.SI.

Fortis will have to offer more than $2.3 billion to buy all
of the Singapore-based hospital chain.

Both Fortis and Khazanah want to use Parkway, which runs 16
hospitals across Asia including Singapore, Malaysia, India and
China to spearhead their regional expansion into healthcare.

In a statement on Friday, the Indian firm, which already
holds roughly 25 percent of Parkway quoted GIC [GIC.UL] as
saying it remains committed to Fortis through its substantial
investment in Fortis' convertible bonds. GIC declined comment
beyond the statement by Fortis.

Fortis had wanted to build a controlling stake in Parkway
but Khazanah made a surprise $835 million offer last month to
lift its stake from 23.5 percent to 51.5 percent.

"The statement doesn't necessarily mean GIC is committed to
the cause of Fortis," said Ranjit Kapadia, an analyst at
Mumbai-based HDFC Securities.

"GIC may not be willing to pay a premium of 11 percent on
the current market price of Fortis and that may have led to the
deferment of allotment."

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For a FACTBOX on Parkway: [ID:nSGE653028]

For a Scenarios story on the tussle: [ID:nSGE65F070]

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KEY ASSETS

Parkway's prized assets are Singapore hospitals, Gleneagles
and Mount Elizabeth, whose patients include many wealthy
businessmen and politicians. [ID:nSGE653028]

With a combined fortune estimated at $3 billion by Forbes
magazine -- good for 17th place on its India rich list -- the
Singh brothers have the means and access to capital to take on
the Malaysian fund if, as some expect, they choose to do so.

Fortis had earlier agreed to allot shares worth 3.8 billion
rupees ($82 million) to GIC.

"It's political. It would not look right if GIC is seen
supporting Fortis when Khazanah is on the other side," said a
Singapore-based trader, who did not want to be named.

He said the market does not think Fortis will make a
counterbid, given the risk of Parkway losing its control over
Malaysia's Pantai, he added.

By 0645 GMT, Fortis shares were down 0.9 percent, while
Parkway shares were little changed.

Most of Parkway's operations in Malaysia are carried out
via Pantai, in which it holds a 40 percent with the balance
held by Khazanah.

Pantai accounts for a quarter of Parkway's revenue and
almost one-third of earnings before interest, tax,
depreciation, amortisation and rent, according to Credit
Suisse.

Khazanah launched a bid for Parkway a week after the
leaders of Singapore and Malaysia agreed to resolve
long-standing disputes over land and water that have plagued
ties between the two countries for the past 20 years.

Fortis also said it had approved the conversion of warrants
into shares totaling 13.42 billion rupees. These warrants were
issued last year with a rights issue.

Singapore's securities regulator has given Fortis until
July 30 to say whether it intends to make a full offer for
Parkway. [ID:nSGE65F0ES]
($1=46.5 rupees)
(Reporting by Sanjeev Choudhary and Sumeet Chatterjee in NEW
DELHI and Kevin Lim in SINGAPORE; Editing by Ranjit Gangadharan
and Anshuman Daga)