IHH Healthcare Bhd plans to gradually increase its stake in India’s Fortis Healthcare Ltd to 51% from 31.17% by 2030, potentially requiring about RM5.8 billion in capital over the next four years, according to CIMB Securities.
The research house maintained its BUY call and sum-of-parts target price of RM10.30 on IHH following a management briefing, saying the group’s long-running legal issues surrounding Fortis are unlikely to have a material impact on operations.
CIMB also made no changes to its FY2026-FY2028 earnings-per-share forecasts.
IHH indicated that it could raise its Fortis ownership by approximately five percentage points annually, either through primary capital injections in exchange for newly issued Fortis shares or purchases of existing shares in the secondary market.
Another potential avenue is a share-swap arrangement involving Gleneagles India and Fortis, which CIMB said could increase IHH’s effective stake by another five to six percentage points.
Based on Fortis’s market capitalisation as at Sept 4 and assuming no share-swap transaction, CIMB estimates IHH would need to commit approximately RM5.8 billion to reach its targeted 51% ownership.
IHH’s net gearing stood at 0.6 times as at June 2026, broadly unchanged from December 2025.
IHH Clarifies Fortis Legal Dispute
The management briefing also provided further clarification on the legal proceedings surrounding IHH’s investment in Fortis and Japanese pharmaceutical company Daiichi Sankyo’s dispute with Fortis’s former controlling shareholders, brothers Malvinder Mohan Singh and Shivinder Mohan Singh.
According to IHH, the sharp reduction in the Singh brothers’ Fortis shareholding primarily resulted from financial institutions liquidating Fortis shares that had been pledged as collateral for their borrowings during 2017 and 2018.
Their effective interest in Fortis fell sharply to 0.77% in March 2018 from 67.62% in November 2017.
The share disposals occurred against the backdrop of Daiichi’s efforts to enforce an INR25.6 billion arbitration award arising from a separate transaction involving Ranbaxy.
Daiichi subsequently filed contempt proceedings against the Singh brothers and various lending institutions following the decline in their Fortis holdings.
IHH, meanwhile, reiterated that it had no direct dealings with the Singh brothers when it invested in Fortis.
IHH Injected INR40 Billion Into Fortis
IHH’s acquisition in November 2018 was carried out through a fresh INR40 billion capital injection into Fortis, with new shares issued to IHH at INR170 apiece.
No acquisition consideration was paid directly to the Singh brothers, CIMB said, citing IHH’s clarification.
Fortis subsequently used the newly raised capital to acquire assets it had been leasing from RHT Health Trust in Singapore.
The preliminary agreement for the RHT transaction had been disclosed before IHH completed its Fortis investment and was subsequently approved by Fortis shareholders in May 2018 with a 98% majority.
According to the report, Daiichi did not object to the RHT transaction at those stages.
Following IHH’s acquisition of a 31.1% interest in Fortis, however, Daiichi secured a Supreme Court stay that halted IHH’s mandatory takeover offer for an additional 26% stake in the Indian hospital operator.
Daiichi had argued that the RHT transaction could result in capital flowing to the Singh brothers, who held a 0.55% interest in RHT, when those assets should have been preserved for enforcement of the arbitration award.
CIMB said it continues to see limited implications for IHH from the proceedings, pointing to what it described as IHH’s arm’s-length acquisition process and the absence of evidence of direct dealings between IHH and the Singh brothers.
India Remains Key Long-Term Growth Market
IHH’s plan to eventually control 51% of Fortis reflects its confidence in the longer-term prospects of India’s healthcare market.
CIMB highlighted structural drivers including an ageing population, increasing prevalence of chronic diseases, greater healthcare awareness and a persistent shortage of quality hospital capacity.
Increasing its Fortis ownership would therefore deepen IHH’s exposure to one of Asia’s major healthcare growth markets while potentially allowing the group to capture a larger share of Fortis’s future earnings.
Despite the potential RM5.8 billion capital requirement, CIMB expects the planned stake increase to have minimal impact on its RM10.30 target price.
The research house maintained its positive investment view on IHH, with the Fortis legal proceedings not expected to materially disrupt operations and the group’s longer-term strategy remaining focused on increasing its exposure to India’s expanding private healthcare market.
