Unexplored Strategies in the Fortis Saga: Public shareholders and IHH Healthcare exposed to significant collateral damage?

Diversion of funds, fundraises gone wrong, stalled open offers, high-stakes arbitrations, settlements with SEBI, and more – the Fortis story has truly been a saga in every sense, and it’s Daiichi Sankyo which leads the latest chapter.


Daichii is on a quest to recover dues from the Singh brothers, the erstwhile promoters of Fortis Healthcare Limited. Their most recent targets: Fortis, INR 4000 crores invested by IHH Healthcare Berhad into Fortis in August 2018, and indirectly, the public shareholders of Fortis.


Rather surprisingly, sparse attention has been paid to the impact that Daiichi’s claims may have both on Fortis’ public shareholders and on IHH. The Supreme Court’s recent judgement now brings both into the fore due to aggressive arguments made by Daiichi.


In this analysis, we unpack Daiichi’s approach thus far, and explore key arguments and strategies for the public and for IHH. Four key arguments form the basis of our final conclusion: public shareholders and IHH must be ready to assume a war-footing, lest they become collateral damage.

Key Takeaways:
  • Latest SC judgement uncovers Daiichi’s new approach – Fortis, IHH and, public shareholders under the gun for liabilities of Fortis’ erstwhile promoters

  • Public shareholders will need to brace for impact and be proactive – else risk getting the short end of the stick

  • Legal sanctity of the ‘theory of attribution’ possibly misplaced in the Fortis context – Fortis now liable for personal assurances of the Singh brothers?

  • Daiichi‘s recalibrated approach to use IHH’s primary infusion funds to clear its dues appears more an afterthought

  • Key strategy for IHH is to rally public shareholders’ support, and sound their collective opposition to courts and SEBI in unison

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