Thursday, May 10, 2007

Fortis Healthcare Ltd. drop below issue price on debut

Shares of Fortis Healthcare Ltd, an Indian hospital chain founded by the owners of the nation’s biggest drugmaker, fell 7% below the sale price, as disputes over key care centres increased the risk perception.

The shares, which listed at the offer price of Rs 108 rupees ($2.6) on the Bombay Stock Exchange today, dipped to Rs 100.35 rupees. The exchange’s 30-company benchmark Sensitive Index dropped for the fourth straight day.

“Litigations surrounding the Escorts facilities have made some investors cautious, especially after the company announced an aggressive sale price,” Himanshu Varia, an analyst with Asit C. Mehta Investment Intermediates Ltd, said over the telephone. “I expected Fortis to set a double digit sale price.”

New Delhi’s land allotment authorities have challenged the rights of Escorts Heart Institute & Research Centre Ltd, or EHIRCL, among the city’s best specialty hospitals that Fortis acquired in 2005, to operate on land leased to a charitable body.

New Delhi-based Fortis, founded in 1996 by the owners of Ranbaxy Laboratories Ltd., listed pending cases against the Escorts property and challenges of integrating the target with itself among the risk factors in its share-sale prospectus.

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