S$ m - Religare Health Trust

Report
Religare Health Trust
2013 , June
STRICTLY PRIVATE AND CONFIDENTIAL
• About Religare Health Trust
• Our Ability to Provide Stable & Growing Distributions
• Financial Highlights
2
Religare Health Trust
Listed on 19 October 2012
Issuer
Religare Health Trust (“RHT”)
Sponsor
Fortis Healthcare Ltd (“Fortis” or the “Sponsor”)
Trustee-Manager
Religare Health Trust Trustee Manager Pte Ltd (“TM”)
Sponsor Stake
Funds Raised at IPO
 28.0% Sponsor stake (220.7 m units)
 Lock-up of 6 months (100%) and further 6 months (50%) from 19 October 2012
 S$510 mil
 567.5 m units (72.0% of total units)
Distribution Yield based on
unit price of $0.965
 8.4% (Projection Year 2014)
Listing Exchange
Mainboard of SGX-ST
Notes:
(1) Projected yields excludes distributions to Sponsor, which has committed to waiving rights to distribution until Mar 31, 2014 in favor of holders of Common Units. Based on unit price as at 28 May 2013
3
Fortis and Religare Partnership
 One of the largest healthcare chains
in India and Asia Pacific’s fastest
growing multi vertical healthcare
delivery system
Unique Healthcare
Offering
 Part of Religare Enterprises, a
diversified financial services firm
listed on the BSE and NSE
 Global multi-boutique asset
management platform with over
US$13.0 billion in Assets Under
Management
– 73 healthcare delivery facilities
RGAM Affiliates
– ~ 12,000 beds
– Presence in 10 countries
– Listed on the BSE and NSE
Investment mandate to
acquire healthcare assets
across Asia, Australasia
and global emerging
markets
Leveraging the Complementary Strengths and Expertise of
Fortis and Religare
4
Overview of Religare Health Trust
RHT Structure
Fortis Healthcare
(“Sponsor”)
Institutional & Public
Investors
28.0%
HMSA
Overview
72.0%
 Base Service Fee
Acts on behalf of
unitholders and
provides
management
services
TM Fees
 Fixed quarterly payments with 3%
escalation per annum
TrusteeManager
Service Fee
Singapore
Distributions
India
Ownership
S$773m total valuation (1)
Service Fee
• 11 Clinical Establishments
• 4 Greenfield Clinical
Establishments
operated by RHT
Clinical
Establishment
Services
Fortis
Operating
Companies
 Upward revision for any capex/
expansion
 Variable Service Fee
 7.5% of the Fortis Operating
Companies’ Operating Income for
each quarter
Current Portfolio
• 2 hospitals managed and
15 year Hospital and Medical Services
Agreements (“HMSA”) with Fortis over the
Initial Portfolio, with extension of further 15
years on mutual agreement
Sponsor
ROFR
Notes:
(1) Independently valued by DTZ in INR as at March 31, 2013 based on S$1 = INR 43.75. Valuation of operating assets based on DCF and Hospital and
Medical Services Agreements (“HMSAs”) as relevant; valuation of greenfield assets based on Market Value.
Right of First Refusal (“ROFR”) over
Sponsor’s medical and healthcare
infrastructure located in Asia, Australasia
and emerging markets in the rest of the
world
5
17 Quality Assets Geographically Diversified Across India


Initial portfolio valued at
S$773m (1)(2)
11 RHT Clinical
Establishments (S$737m)
 4 Greenfield Clinical
Establishments ($31m)





2 hospitals managed and
operated by RHT ($5m)
Approximately 4.1 million
sq ft of built-up area
across 10 states
Sizeable Population
Catchment
Located Close to Major
Transportation Nodes
: RHT Clinical Establishments
: Greenfield Clinical Establishments
: Operating Hospitals
Amritsar
153 Operational Beds
166 Installed Bed Capacity
Ludhiana
75 Potential Bed Capacity
Operational: 2QFY2015
Gurgaon
450 Installed Bed Capacity
1,000 Potential Bed Capacity
New Delhi, Shalimar Bagh
130 Operational Beds
350 Installed Bed Capacity
Noida
191 Operational Beds
200 Installed Bed Capacity
Greater Noida
350 Potential Bed Capacity
Operational: 4QFY2016
Faridabad
210 Operational Beds
210 Installed Bed Capacity
Jaipur
207 Operational Beds
320 Installed Bed Capacity
Mumbai, Kalyan
44 Operational Beds
52 Installed Capacity
Mumbai, Mulund
236 Operational Beds
567 Installed Bed Capacity
Bengaluru, Rajajinagar
31 Operational Beds
31 Installed Bed Capacity
Bengaluru, Nagarbhavi
45 Operational Beds
45 Installed Bed Capacity
Notes:
(1)
No. of beds and installed capacities as of March 31, 2013. Potential bed capacity assumes all planned phases
of development and construction are completed in respect of the Gurgaon Clinical Establishment and the
Greenfield Clinical Establishments
(2)
Independently valued by DTZ in INR as at March 31, 2013 based on S$1 = INR 43.75. Valuation of operating
assets based on DCF and Hospital and Medical Services Agreements (“HMSAs”) as relevant; valuation of
greenfield assets based on Market Value.
Kolkata
126 Operational Beds
373 Installed Bed Capacity
Hyderabad
400 Potential Bed Capacity
Operational: 4QFY2016
Chennai, Malar
170 Operational Beds
178 Installed Bed Capacity
Chennai
45 Potential Bed Capacity
Operational: 1QFY2015
Bengaluru, BG Road
239 Operational Beds
255 Installed Bed Capacity
6
Diversified Healthcare Portfolio Positioned for Growth
Organic Growth Potential
Focus on Provision of High End Healthcare Services
(Number of Beds as of 31 March 2013)
(% of Initial Portfolio Valuation)
+1,420 beds
Quaternary
+1,415 beds
4,617
32.9%
Tertiary (2)
3,197
1,782
63.7%
Current Operational Beds
(31 March 2013)
Installed Bed Capacity (1)
Potential Bed Capacity (1)
3.5%
Substantial Portion of Initial Portfolio Comprise Long Term
Lease / Freehold Land
(% of Initial Portfolio Valuation)
Freehold
60.3%
Weighted Avg Lease
Life of Leasehold
Assets of ~58 Years (3)
>50 Years Remaining
Lease Life
26.1%
Secondary
High Proportion of Income Generating Clinical
Establishments
(% of Initial Portfolio Valuation (3))
RHT Clinical
Establishments
95.4%
Greenfield
Clinical Establishments
3.9%
Operating
Hospitals
0.7%
<50 Years Remaining
Lease Life
13.7%
Notes:
(1)
Installed capacity refers to the maximum number of beds that can be operated at each hospital without further expansion. Potential capacity refers to the maximum number of beds that can operate at each hospital when all stages of
development are completed.
(2)
Includes Secondary/Tertiary Services.
(3)
Weighted by asset valuation.
7
Stable & Growing Distributions
Our distributions are stable and growing stemming from the following:
-
Service Fees structure
-
Policy of fully hedged distributions for next 12 months
-
Potential for organic & inorganic growth (including ROFR)
-
Working with a premium healthcare operator
8
Stabilized Distributions, With In-Built Organic Growth
1 Long term Hospital & Medical Services Agreement
Service Fee (1)
(S$m)
HMSAs with Fortis for 15 years, with further 15 year
extension by mutual consent
3.5%
2 Downside Protection, With In-Built Organic Growth
Variable Service Fee
–7.5% of Fortis
Operating
Companies’
Operating
Income
$85.2
21.1
$88.2
• Base Fee with fixed escalation of 3% p.a. (accounts for
c.79.4% of total Service Fee for FY2013)
24.0
3 Low Gearing
Base Service Fee (2)
–3.0% p.a. fixed
escalation
– Upward revision
for any capex /
expansion
• Variable Fee of 7.5% of Fortis Operating Companies’
Operating Income
8.9% Low in comparison to peers
64.1
64.2
4 100% Distribution Payout
• 100% distribution payout over Forecast Year and
Projection Year
• Sponsor distribution waiver over Forecast Year and
Projection Year
Actual Year 2013
(annualized)
Projection Year
2014
5 Fully Hedged Distributable Income
Distributable income has been hedged for the next payouts
–30 September 2013 & 31 March 2014
Notes:
(1)
Excludes income from ancillary services; Financials converted at S$1 = INR 44.04 for FY2013, S$1 = INR46.70 for FY 2014, and exchange rate at the listing date of S$1= INR43.55
(2)
Base Service fee excludes accounting straight lining and includes Technological Renewal Fee and are on a full year basis. Base Service Fee from the Gurgaon Clinical Establishment will increase by more than
3.0% per annum until March 31, 2014 when the asset is expected to stabilize.
9
Capacity Expansion- Update
RHT has four running projects for capacity expansion, below is the status as of 31st March 2013
Name of Project
Anandpur, Kolkata
Nature of Project
Leased – Brown Field
Expansion work at 10th & 9th
expansion. Addition of
Floor, IVF & PHC. Addition
20Beds.
of 80 Beds.
Total Cost (INR m)
Rajajinagar, Bengaluru
Jaipur
Expansion work at 7th
Floor, IVF & PHC.
Addition of 21Beds.
72.40
30.0
58.5
Project End Date
July 2013
October 2013
In progress
Project Handover Date
July 2013
October 2013
September 2013
80%
50%
65%
Completion %
BG Road, Bengaluru
Addition of 79 ICU
Beds in two phases.
85.4
Oct, 2013
Oct, 2013
-
10
In-Built Development Pipeline; Sponsor’s Interests Aligned
25% interest free commitment deposit from Sponsor via HMSA to finance development cost
Healthcare Asset
Chennai
Description
 Tertiary hospital
 Expansion to the Chennai,
Malar Clinical
Establishment
 Tertiary hospital
Planned Builtup Area (sq ft)
38,072
400,000
Expected
Development
Cost (1)
S$2.6m
S$36.7m
Potential
Bed
Capacity
45
 Currently in planning and
design stage
 Filed building plans for
approval
400
 Lease agreement currently
being signed
 Submitted preliminary project
investment development plan
to Hyderabad Metropolitan
Development Authority
Hyderabad
Ludhiana
Project Status
 Quaternary hospital
offering diagnostic, day
care, mother & child and
cosmetic and aesthetic
surgery services
92,318
S$14.8m
75
 Currently in planning and
design stage
 Filed building plans for
approval
 Tertiary hospital
350,000
S$28.1m
350
 Master planning stage
880,390
S$82.2m
870
Greater Noida
Total
-
-
Note
(1)
Converted to S$ from INR at S$1 = INR 43.55.
Source: Fortis presentation, RHT preliminary prospectus dated 15 October 2012
11
Growth Strategy Supported by Sponsor
Access to Regional “On-the-Ground” Intelligence
Key ROFR Assets (1,120 beds) (1)
India (289 beds)
Escorts Okhla
India
289 Licensed
Beds
Dubai
India
Hong
Vietnam Kong
Singapore (31 beds)
Fortis Colorectal
Hospital
Singapore
31 Licensed Beds
Sri
Lanka
Singapore
Vietnam (800 beds)
Hoan My Saigon
Phan Xich Long
Vietnam
200 Licensed
Beds
Hoan My Da Nang
Vietnam
200 Licensed Beds
Hoan My Can Tho
Vietnam
150 Licensed Beds
Note
(1)
Provided that the Relevant Sponsor Entity is a subsidiary that is jointly owned with 3 rd parties, ROFR will
be subject to the consent of such 3rd parties. Sponsor shall use its best endeavors to obtain such consent;
Data on ROFR assets as of Dec 31, 2011.
Hoan My Da
Lat
Vietnam
200 Licensed
Beds
Hoan My Minh
Hai
Vietnam
50 Licensed
Beds
12
Leverage Sponsor’s Expertise and Development Track Record
Fortis’ Historical Indian Hospital Business Performance
(INR m)
Annual Basis
Quarterly Basis
28% y-o-y
growth
Average c.6% q-o-q growth
3,714
3QFY11
4,156
4,220
4QFY11
1QFY12
4,830
4,824
2QFY12
3QFY12
19,074
5,320
5,200
14,827
4QFY12
1QFY13
FY11
FY12
Proven Track Record of Maturing Greenfield Assets (1)
Ramp Up At An Acquired Facility: Fortis
Malar, Chennai
Extracting Value From M&A:
Escorts Amritsar
Performance Of A Greenfield Facility:
Jaipur
(S$m)
(S$m)
(S$m)
36%
Revenue
CAGR
Acquired Fortis Malar
in February 2008
52% Revenue
CAGR
21.3
18.8
4x revenue growth
on annual basis since inception 6.4
15.8
13.9
4.7
11.3
14.5
3.8
9.3
4.0
0.9
FY08
2.0
5.8
7.5
0.2
FY09
3.2
2.1
FY10
Operating Revenue
3.6
0.7
FY11
FY12
EBITDA
Source: Company filings, corporate presentations.
(1) Financial year ending 31 March; Financials converted to S$ at S$1 = INR 44.34.
FY08
2.2
6.9
3.3
FY09
FY10
Operating Revenue
3.5
1.7
4.1
0.8
1.8
1.0
(0.1)
FY11
EBITDA
FY12
3Q09
3Q10
3Q11
Operating Revenue
3Q12
4Q12
EBITDA
13
Key Drivers of Growth in the Indian Healthcare Market
A Growing & Aging Population
India’s Population
(Million)
1,010
1,256
24.4%
1,080
B High Healthcare Demand / Supply Gap
Hospital Beds per 1,000 Population in 2011
5.2%
1,173
4.0
C Growing Affluence
GDP Per Capita
(US$)
7.8% CAGR
1,875
1,723
1,583
5.0%
1,389
4.8%
4.5%
1,455
Implied gap
of 3.7m beds
0.9
2000
2005
<65 Years
2010
>= 65 Yrs Old
2015E
D Changing Disease Profile
WHO Recommendation
E Increasing Health Insurance Coverage
% of Hospitalisation Cases
Lifestyle
Diseases,
18.5%
India
% of Healthcare Spend at Corp. Hospitals in Tier 1
Cities Covered by Insurance
Lifestyle
Diseases,
24.0%
Source: F&S Market Research Report.
2013E
2014E
2015E
F Growing Medical Tourism
US$2.1bn
Industry
by 2015E
Indian Medical Tourism Industry
(‘000 Medical Tourists)
14.0% CAGR
520
460
410
360
320
270
Others,
76.0%
2010
2001
2012E
40% of expenditures
covered by insurance
25-30% of
expenditures covered
by insurance
Others,
81.5%
2011
2012E
2015E
2010
2011E
2012E
2013E
2014E
2015E
14
Market and Sector Update

Delhi Development Authority hiked FAR of hospitals by 25-50%. This would have an
impact on the Shalimar Bagh hospital, potentially allowing for an increase in number
of beds

The government has clarified its stance on Put and Call Options, stating that
regulation drafted by SEBI on allowing these options will be approved. This was one
of the risk factors in RHT’s prospectus

RBI has over the last few monetary policy meetings lowered interest by .75 bps
stating that Inflation being lower than 5% also gives it to reduce rates further at the
next monetary policy meeting on June 17th

The Indian Hospital sector continues to attract foreign investments. Since 1st of
January 2013, Temasek invested S$32 million in a Bangalore based cancer hospital
group, IFC and Sabre invested S$51 million in Global Hospitals, Sequoia invested
S$11.5 million in ASG Eye Hospitals
Gurgaon CE Launch
 Inaugurated On May 1st 2013 by Actor – philanthropist Mr
Salman Khan
 Guests of Honor were Dr Pratap Reddy, Chairman Apollo
Hopsitals, Dr Naresh Trehan, CEO Medanta and Salman
Khurshid Cabinet Minister for External Affairs
 The facility would have core specialiaites in Oncology, Mother
and Child and Trauma alongside speciailities in Cardiac,
Transplants (Bone Marrow has started) and Neurosciences
 The current capacity is 450 beds (Phase I) that will be taken
up to 1000 beds over time. All relevant staff to manage the
450 beds, including doctors and nurses, have been hired.
 Collaboration announced with Being Human – an NGO
sponsored by Mr Salman Khan to treat 500 children with heart
ailments free of cost. RHT would also be giving space to the
charity to set up a store at the hospital free of cost as part of
its CSR initiatives.
Experienced Board and Management Team
Majority independent directors with proven track record in healthcare and funds management
Dr. Yogendra Nath Mathur
Chey Chor Wai
Lead Independent Director
Chairman of Audit and Risk
Management Committee and
Independent Director
33 years of relevant experience
Ravi Mehrotra
Executive Chairman
Michael Hwang S.C
Independent Director
Peter Joseph Seymour
Rowe
Independent Director
Religare Health Trust
Executive Directors / Management
Gurpreet Singh Dhillon
Dr Virender Sobti
Executive Director & CEO
Chief Operating Officer
India
Naveen Bhatia
Tan Suan Hui
Pawanpreet Singh
Head, Finance & Accounts
Head of Compliance / IR
Executive Director & CFO
India
17
• Financial Highlights
18
Hospital-wise Revenue (S$ m)
FY 13
19%
50.00
FY 12
7%
46.63
44.34
45.00
40.00
17%
44.34
41.60
39.31
37.94
20%
35.00
55%
31.31
13%
13%
30.00
26.06
26.51
24.69
25.00
21.94
20.00
22.40
21.71
17.14
15.00
10.00
5.00
0.00
Mulund
BG Road
Noida
Jaipur
Shalimar Bagh
Faridabad
Malar
19
Occupancy (%)
FY 13
FY 12
100%
90%
86%
86%
83%
77%
80%
72%
79%
77%
80%
77%
73%
70%
70%
66%
60%
60%
60%
50%
40%
30%
20%
10%
0%
Mulund*
BG Road
Noida
Jaipur
Shalimar Bagh
Faridabad
Malar
* Lower occupancy due to operational capacity expansion/bed additions
20
ARPOB (S$ m)
0.35
0.31
0.30
FY 13
0.29
FY 12
0.27
0.24
0.25
0.22
0.22
0.21
0.22
0.21
0.20
0.17
0.21
0.18
0.16
0.14
0.15
0.10
0.05
0.00
Mulund
BG Road
Noida
Jaipur
Shalimar Bagh
Faridabad
Malar
21
Average ARPOB and Occupancy Rate across entire RHT Portfolio
Q3
Q4
ARPOB (SGD’000)
194
205
Occupancy
75%
73%
Variance between Forecast and Actual ARPOB and Occupancy Rates
ARPOB (SGD’000)
Occupancy Rate
Prospectus
Forecast 2013
Actual
FY2013
Prospectus
Forecast 2013
Actual
FY2013
Bengaluru
228
240
79%
77%
Malar
196
220
65%
60%
Faridabad
150
180
80%
66%
Jaipur
181
170
82%
86%
Mulund
236
270
72%
72%
Shalimar Bagh
211
220
83%
83%
Noida
289
310
79%
79%
23
Financial Results for year ended 31 March 2013 (against Forecast)
Service Fee
Hospital Income
Other Income
Total Revenue
Operating Expenses
Net Operating Income
Finance Income
Actual
Forecast
Variance
S$'000
S$'000
S$'000
46,068
45,473
595
2,642
2,298
344
917
824
93
49,627
48,595
1,032
(20,164)
(18,315)
(1,849)
29,463
30,280
(817)
328
9
319
Finance Expenses
(1,455)
(1,567)
112
Trustee-Manager Fee
(2,304)
(2,272)
(32)
Other Trust Expenses
(943)
(631)
(312)
Foreign exchange gain
(87)
-
(87)
Share of Results of Associates
(3,224)
(1,885)
(1,339)
Issue Costs
Profit Before Deemed disposal
of associates, change in fair
value of financial derivatives
(7,186)
(9,062)
1,876
14,592
14,872
(280)
(12,134)
(10,739)
(1,395)
(1,799)
-
(1,799)
659
4,133
(3,474)
Taxes
(5,939)
(5,974)
35
Net Loss
(5,280)
(1,841)
(3,439)
Deemed disposal of associates
Loss on change in fair value of
financial derivative
Loss Before Taxes
Unitholders Distribution as at 31 March 2013
Net Loss
Actual
Forecast
Under/(Over)
S$'000
S$'000
S$'000
(5,280)
(1,841)
(3,439)
(6,612)
(6,464)
(148)
(310)
(301)
(9)
6,520
5,241
1,279
250
295
(45)
1,152
1,111
41
Distribution Adjustments:
Impact of non-cash Straight Lining
Technology Renewal Fee
Depreciation and Amortisation
Amortisation of debt arrangement
fee
Trustee-Manager Fees payable in
Units
Foreign exchange gain
Unrealised gain on financial asset
Loss on change in fair value of
financial derivative
Deferred Tax Expenses
Share of results of associates
Deemed disposal of associates
Issue expenses
Total Distributable Income
87
-
87
(108)
-
(108)
1,799
-
1,799
(264)
367
(631)
3,224
1,885
1,339
12,134
10,739
1,395
7,186
9,062
(1,876)
19,778
20,094
(316)
(367)
(445)
78
20,145
20,539
(394)
19,778
20,094
(316)
(Loss)/distributions attributable
to:
Pre-Listing Unitholder
Post-Listing Unitholders
25
Hedging - Foreign currency exposure
100% Hedging done for the forthcoming 3 Distributions
Particulars
Minimum Hedging (percentage to total exposure)
Up to first 18 months
100% on 6 month rolling basis
Forward contracts already entered into
INR to be paid by FGHIPL
Contracted
rate
SGD to be delivered by
bank
Settlement
1,140,875,000
45.635
25,000,000
15-May-13
1,169,250,000
46.77
25,000,000
15-Nov-13
1,194,750,000
47.79
25,000,000
15-May-14
The average contracted rate for FY 14 is 47.28.
26
Market Performance of RHT against comparable peers (rebased 19 Oct 2012 to 28 May 2013)
RHT
First REIT
Plife REIT
AIT
FTSE REIT
140%
135%
130%
125%
120%
115%
110%
105%
100%
95%
90%
19 Oct 12
12 Nov 12
04 Dec 12
Name
27 Dec 12
18 Jan 13
08 Feb 13
Total Volume *
Daily Average Volume *
Religare Health Trust
669,759,000
4,525,399
Ascendas India Trust
187,544,000
1,267,189
First Real Estate Investment Trust
118,297,000
799,304
Parkway Life REIT
64,238,000
434,041
* For the period 19 Oct 2012 to 28 May 2013
05 Mar 13
26 Mar 13
17 Apr 13
09 May 13
27
Distribution Yield for FY 2013
RHT's 2013 Distribution yield stands outs
9.0
8.3 8.2
8.0
Wtd Avg: 5.33
7.0
7.0
6.0
5.0
6.6
6.2 6.2 6.2 6.1 6.0 6.0
5.7 5.6 5.6 5.5 5.5 5.5
5.3 5.3 5.2 5.1
5.0 5.0 4.9 4.9 4.8
4.7
4.3
4.0
4.0
3.0
2.0
1.0
0.0
Source: Bloomberg consensus estimates, Standard Chartered Research estimates for covered companies (*not under SCB coverage)
Standard Chartered Research Report dated 23 May 2013
28
Yield and P/B Comparison
Yield
Gearing ratio
P/B
1.70 X
1.25 X
1.16 X
1.09 X
39.0%
33.0%
21.0%
6.2%
5.6%
4.0%
AIT
Plife
First Reit
8.2% 8.9%
RHT
Sources : Standard Chartered Research Report dated 23 May 2013, OCBC Investment Research Weekly SREITs dated 13 May 2013
RHT gearing figure based on actuals
29
Financial Highlights
Revenue
(S$m)
(1)
Distributable Income (1)
Average NOI
margin: 59%
110.4
109.4
2.0
1.9
5.9
5.2
(S$m)
DPU Yield (1)
2.44%
46.6
44.8
8.2%
2.3%
102.5
2.4%
Sponsor
Waiver
102.3
Actual Year 2013
(annualised)
Service Fee
8.4%
Projection Yr 2014
Hospital Income
Actual Year 2013
(annualised)
Projection Yr 2014
Other Income
5.9%
6.0%
Actual Yr
2013 (ann.)
Projection Yr
2014
Gearing: 8.9%
Notes:
(1)
Financials converted at S$1 = INR44.04 for FY2013, S$1 = INR46.70 for FY 2014, and exchange rate at the listing date of S$1= INR43.55;.
(2)
Includes straight lining of Base Service Fee.
(3)
DPU calculated based on unit price traded on 28 May 2013
30
Appendix
Fee Structure
Performance based management fees designed to align Management’s interests with Unitholders
Base fee
Acquisition / divestment fee
Performance fee
 0.5% - 1.0% of acquisition price
 0.4% p.a. of the value of the
Trust Property
 50% to be paid in Units (1)
 4.5% p.a. of Distributable Income (2)
 50% to be paid in Units (1)
 0.5% of the sale price (Divestment
to 3rd party)
 No divestment fee (Divestment to
Sponsor)
Development fee
 2.0% of total development project costs
 Payable in the form of cash and/ or units
Asset management fee
 1.0% of gross revenue
 Paid quarterly in arrears
 No asset management fee paid for assets
operated by Sponsor
Note
(1)
For the Forecast Year 2013 and Projection Year 2014
(2)
Distributable Income means the distributable amount determined by the Trustee-Manager in accordance with the terms of the Trust Deed
to be distributable for the relevant distribution period (pro-rated if applicable based on the number of months the relevant financial quarter
bears to such distribution period)
32
Efficient Trust Structure
India
Singapore
Promoters (1)
Others
~81%
New Unitholders
Trustee-Manager
~19%
Distributions
100%
Fortis Health
International Limited
(Mauritius)
Dividends
72.0%
Fortis
Operating Companies
(“FOCs”)
Hospital operating
capabilities
Clinical
Establishment
Services
Service
Fees
Hospital Services
Companies (“HSCs”)
Ownership of medical and
healthcare infrastructure facilities
Acts on behalf of
Unitholders and provides
management services
28.0%
Distributions
Dividends
100%
TM Fees
Investments in Compulsory
Convertible Debentures
(“CCDs”) and equity shares
CCD Interest payments
and dividends
100%
Fortis Global
Healthcare
Infrastructure
Hospital and Medical Services Agreements
(“HMSAs”)
Note:
(1)
Promoters comprise Malvinder Mohan Singh, Shivinder Mohan Singh and their associates.
33
Income Secured Through Long Term Working Agreements
Prior to listing, the Hospital Services Companies (“HSCos”) will enter into Hospital and Medical Services Agreements
(“HMSAs”) with the Fortis Operating Companies (“FOCs” ) to operate the healthcare infrastructure assets (1).
Mechanics of the HMSA
Key Terms of the HMSA
Term of
Agreement
Hospital Services
Company
Ownership
Ownership
Earnings
A
Primary
Obligations of
HSCos
Ancillary
Services
C
Services
Fees
A
Services
B
Primary
Obligations of
FOCs

15 years with option to extend by another 15 years by mutual
consent

Making available and maintaining the Clinical Establishments

Provision of outpatient services

Provision of radio diagnostic services

Provision of healthcare services at the Clinical Establishments

Pay to HSCos the Services Fees and Commitment Deposits

Base Service Fee
– Increased by 3% p.a.
– Upward revision for any capex / expansion
– Provision for capex to replace medical equipment
(“Technology Renewal Fee”) added to Base Fee (2)
– HSCos entitled to request for an advance of up to 60% of the
Base Service Fee

Variable Service Fee
– 7.5% of the operating income of the FOC

FOC to pay to HSCo 25% of cost for expansions of capacity /
modification of Fortis Hospitals as an interest free refundable
commitment deposit
+
D
Clinical Establishment
B
Operated
by
Commitment
Deposits
C
Services Fee
Fortis Operating
Company
Public
D
Commitment
Deposits
Source: TM
Notes:
(1) Fortis has signed commitment agreements to enter into similar HMSAs for the greenfield healthcare infrastructure assets.
(2) Technology Renewal Fee will be paid into a Technology Renewal Fund to be maintained by Fortis.
34

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