KUALA LUMPUR (Nov 18): IHH Healthcare Bhd is facilitating the planned sale of up to a 44% stake in SRL Ltd, the diagnostics arm of Fortis Healthcare Ltd, The Economic Times reported, quoting multiple sources.

It was reported that private equity firms, TA Associates, Warburg Pincus and ChrysCapital, have been shortlisted from a group of five suitors to acquire up to 44% stake in SRL. It was reported that the 44% SRL stake is owned by several shareholders in various portions.

"The three shortlisted bidders have proposed offers that peg the valuation of SRL between Rs 3,700-4,200 crore, people aware of the matter said. Fortis owns about 56% in its diagnostics arm. Incoming investors will have to fork out at least Rs 1,750 crore or US$250 million, but the final deal size will depend on how much stake they eventually acquire.

"Shortlisted bidders held management meetings with the Fortis leadership and representatives from Malaysia's IHH Healthcare in the first week of November, sources said. They were asked to revise their financial offers.

"IHH, which owns a significant (31.1%) stake in Fortis, is facilitating the transaction. IHH has a preference for an investor who will play a passive role, according to people in the know. Some of the suitors have asked for rights to replace key management personnel at SRL, though this could become a stumbling block in the deal as IHH Healthcare is said to be averse to allowing this.

"NY Jacob Ballas, Siguler Guff & Co and International Finance Corporation, whose exit from diagnostics company SRL was stalled after a legal setback, have restarted the process of selling their combined 31.5% stake and had appointed Kotak Mahindra Capital Company as merchant banker for the proposed divestment. In addition to this, two other investors — Axis Bank (5.5%) and the family of Gurinder Singh Dhillon of Radha Soami Satsang Beas (5%) — may also exit the diagnostics company if they get the same terms. If these shares are also sold, the new owner may well end up controlling 40-44% of the company, said a person familiar with ongoing negotiations," The Economic Times reported.

At the time of writing this theedgemarkets.com report, IHH had not issued a statement in response to news reports on the SRL stake sale.

At Bursa Malaysia today, IHH's share price rose 10 sen or 1.87% to RM5.45 at 4:26pm. IHH saw 741,900 shares traded.