SINGAPORE Religare Health Trust is set to launch an up to $400 million initial public offering in Singapore, a source said, in a move that will allow the backer of the trust, Indian hospitals group Fortis Healthcare, to cut its substantial debt level.
The trust, which will own assets managed by Fortis, plans to begin premarketing of the IPO in early September, said the source who had direct knowledge of the deal.
The IPO will be structured as a business trust and will offer a minimum yield of 8.5 percent to investors, the source said. Listing has been planned for end-September.
This will be the third biggest IPO in Singapore this year after the dual listing of IHH Healthcare in a $2.1 billion deal and Far East Hospitality Trust, which raised $575 million in an IPO last week.
Fortis is India's No. 2 hospitals operator after Apollo Hospitals Enterprise. It had consolidated net debt of 62.37 billion Indian rupees ($1.12 billion) as of end-June.
Fortis is also considering an IPO for its diagnostics business SRL Diagnostics Ltd in India.
"They have huge debt. So to improve the leverage ratios they need to do it (IPO) as quickly as possible," said Siddhant Khandekar, analyst at ICICI Direct in Mumbai.
"Otherwise, their interest cost is eating out their performance and causing losses at the PAT (profit after tax) level."
Khandekar pointed at the interest cost of Fortis for the April-June quarter, which was 1.78 billion rupees.
The trust will also buy third-party assets over time, the source added, declining to be identified because the listing details have not been publicly disclosed.
Fortis officials could not be reached for comment.
Religare Health Trust has a mandate to invest in medical and healthcare assets and services in Asia, Australasia and emerging markets, Fortis has said previously.
CIMB has been added to the list of the IPO's bookrunners, which earlier included Religare Capital Markets, Citigroup, Nomura and Standard Chartered, the source said. ($1 = 55.4800 Indian rupees)
(Additional reporting by Kaustubh Kulkarni in Mumbai; Editing by Muralikumar Anantharaman)