Fortis Healthcare Acquires 28.6pct of Lanka Hospitals from Distilleries for Rs3.9bn

05th March 2011, www.business-standard.com

Fortis Global Healthcare today acquired a 28.6 per cent stake in Lanka Hospitals Corporation from an industrial conglomerate, Distilleries Company of Sri Lanka, for Rs 162 crore (397.55 crore Sri Lankan rupees).

The Lanka Hospitals Corporation, majority owned by a government firm, Sri Lanka Insurance Corporation Ltd, runs a 350-bed hospital in Colombo. The company plans to expand its presence in the island nation. The deal — sale of 64.1 million shares at 62 Sri Lankan rupees per share — has come five years after Apollo Hospitals, India’s largest private healthcare provider, exited Sri Lanka by selling its significant minority shareholding in the same company.

Apollo had sold 52 million shares it owned in Lanka Hospitals in 2006 for about half the price paid by Fortis, though it retained its brand franchise agreement and technical support for some more years.

Fortis Global is the Singapore-based overseas investment arm of the promoters of India’s second-largest private healthcare provider — Fortis Healthcare Ltd.

“Lanka Hospitals is the first step for Fortis Global to build its healthcare business interest in one of the fastest-growing economies in Asia. It is one of the most advanced and comprehensive healthcare facilities in Sri Lanka. We believe there are tremendous opportunities for the hospital’s expansion and we will support the company’s management in realising such growth,” Fortis Global Executive Chairman Malvinder Mohan Singh said.

Incidentally, Lanka Hospital’s 2009 Annual Report says the reason to discontinue its brand association with Apollo was that “the brand had fewer positives in the local market where perceptions of high cost, non-Sri Lankan identity and being less in tune with local healthcare needs existed”.The Lanka Hospital spokesperson was not available for comments.

Under Sri Lankan rules, acquisition of 30 per cent of the voting rights will trigger an open offer for the balance shares. The current investment is the fourth for Fortis Global in five months. It had acquired the largest private primary care company in Hong Kong, invested in the largest dental care company in Australia and announced the acquisition of a cancer speciality hospital project in Singapore during this period.

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Sri Lanka Distilleries Invests in 4MW Hydro Power Plant

30th March 2010, www.lankabusinessonline.com

Sri Lanka's Distilleries Company, said it was spending 750 million rupees to by into a 4 MegaWatt hydro power plant in a tea plantation which is an associate firm in its group. Bogo Power Pvt Ltd, will be built on Kirkoswals estate in the Bogowantalawa area in Sri Lanka's central hill region.

Distilleries said the firm had already signed a standardized power purchase agreement with state-run Ceylon Electricity Board to sell its output.

Distilleries is part of the Stassen's group controlled by businessmen Harry Jayewardene.

Distilleries Company of Sri Lanka Planning to Enter Insurance Industry in 1bn Investment

11th December 2009, www.island.lk, By Devan Daniel

Harry Jayawardena-controlled alcohol producer Distilleries Company of Sri Lanka, a public listed company, is planning to enter the insurance industry with its own company months after it lost control of Sri Lanka Insurance Corporation when the Supreme Court nullified the sale of the government-owned insurance corporation to Distilleries.

In a filing to the Colombo Stock Exchange, Distilleries said it plans to make an initial investment of Rs.500 million in a new insurance company.

The company said it has submitted an application to the industry regulator, the Insurance Board of Sri Lanka, to register a new insurance company fully owned by Distilleries.

"The initial investment is Rs.500 million and if necessary the provision will be increased to Rs.1 billion," the company told the stock exchange.

An official of the Insurance Board of Sri Lanka told the Island Financial Review that the application was being evaluated.

"Under the existing law the capital requirement for general insurance and life insurance lines is Rs.100 million each. Once the registration is approved then the public can know what exactly the company would have to offer," the official said.

Distilleries acquired state-owned Insurance Corporation in 2004, a deal the Supreme Court nullified earlier this year which saw the state regain control of the insurance company.

The court asked the government to pay back Rs.6 billion, for which five year bonds had been issued.

Distilleries is controlled by a private unlisted company, Stassens Group, which is controlled by business tycoon Harry Jayawardena who has large stakes in Hatton National Bank, Commercial Bank and National Development Bank.

Last June the Supreme Court nullified the privatisation of Sri Lanka Insurance. The lengthy Supreme Court ruling said: "It is sufficient to say this Court is shocked by the manner in which the senior public officers had handled the sale of a pivotal asset of the state which belongs to the people of this country."

Nihal Sri Ameresekere, former Chairman of the Public Enterprises Reform Commission, a man who believes in free markets and Vasudeva Nanayakkara, a left-wing politician, the duo responsible for taking the privatization deal before the Supreme Court, both said the case exposed how politicians, public officials and businessmen connived to fleece the public.

"Now it is up to the government, the CID, the bribery commission, Securities and Exchange Commission and the Chartered Institute of Accountants to carry out investigations and penalize wrong doers," Ameresekere told journalists soon after Supreme Court ruling.

"What we filed was a fundamental rights application. Now it is up to the government to take the matter up with the penal code where jail terms and fines will be the just deserves of those who let this fraud take place," he said.

Nanayakkara, however, was skeptical the wheels of justice would be moved any further.