IHH says it will take Fortis Healthcare to 51% over three to five years. A forensic audit ordered in a dispute it was never party to is examining how it took control in 2018.
On 28 September 2026 IHH Healthcare said it plans to raise its stake in Fortis Healthcare to 51% over three to five years, three days after the Supreme Court of India let a Delhi High Court forensic audit proceed. The audit, ordered in Daiichi Sankyo's enforcement case against Fortis's former promoters, covers the dissipation of their shares and the change in control that followed, a dispute neither Fortis nor IHH was party to. IHH entered in 2018 by a INR 4,000 crore preferential allotment for 31% and bought nothing from the former promoters. For a GCC buyer of an Indian hospital, the lesson is diligence on the people leaving the asset, and on the takeover rules that set how fast control can be built.
What a board member needs before the next meeting on this.
- The audit reaches the 2018 change in control. The 31 August 2026 order directs an enquiry into the dissipation of the former promoters' shares and the change in control that followed. Fortis management says the scope includes IHH's acquisition and how the money was used.
- A clean entry did not keep IHH out. IHH paid INR 4,000 crore in new shares for 31% plus a tender offer, and bought nothing from the former promoters. It has still spent years inside their creditor's enforcement case.
- Fifty-one per cent is a four-year climb. SEBI's takeover rules allow a 25%+ holder to add at most 5% a financial year without an open offer. From 31.17% that is four financial years on our arithmetic, matching IHH's three-to-five-year window.
- No liability, but a timetable. The High Court imposed no liability, penalty or fine on Fortis. On management's reading of the order, the report is due about seven and a half months after the auditor starts, on our count.
On 28 September 2026 IHH Healthcare Berhad told Bursa Malaysia and SGX that it plans to raise its stake in Fortis Healthcare to 51% over the next three to five years, integrate Fortis with its Gleneagles hospitals and reach about 10,000 beds by 2031; Fortis filed the statement with NSE and BSE the next day (Fortis Reg 30 filing, 29 September 2026).
The statement opened with the news that on 25 September the Supreme Court of India had disposed of Fortis's challenge to a Delhi High Court order for a forensic audit, and the audit now proceeds. One of the largest foreign investors in Indian hospitals, on its own description, is setting out its route to majority control while an auditor examines, among other things, how it took control in 2018.
The audit reaches a buyer that was never in the dispute
The order of 31 August 2026 in Daiichi Sankyo v. Malvinder Mohan Singh, O.M.P.(EFA)(COMM.) 6/2016, directs a forensic auditor to enquire into the dissipation of the Singh brothers' shareholding in Fortis, the change in control that followed, and the role of the banks, the former promoters and Fortis itself (Fortis Reg 30 filing, 1 September 2026).
The court imposed no liability, penalty or fine on Fortis, which was neither a party to the original dispute nor a judgment debtor.
On a 4 September investor call, Fortis's chief executive described the scope as including the acquisition of the controlling stake by IHH and its subsidiary Northern TK Venture, the approvals and filings behind it, the later use of the money to buy hospital assets from RHT Health Trust in Singapore, and the role of 17 banks and financial institutions (call transcript, filed 10 September 2026). That account of the scope is management's; we have not read the order.
How IHH got in is its defence
IHH entered in November 2018 through a preferential allotment of new Fortis shares for INR 4,000 crore and a 31% stake, together with a mandatory tender offer to public shareholders; it bought no shares from the Singh brothers and paid them nothing (Fortis Reg 30 filing, 29 September 2026).
Fortis adds that the investment came out of a competitive process run from June 2018 by an independent board, installed by institutional shareholders after the Singh brothers' holding fell below 1% and they left the board (Fortis Reg 30 filing, 27 September 2026). Both companies say they expect the audit to confirm that account.
The lesson for a buyer sits in the gap between the two facts: a primary subscription that never touched the outgoing promoters' shares has still been caught in their creditor's enforcement case, first through a delayed tender offer and now through an audit.
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The Supreme court softened the words, not the audit
Fortis reports that the Supreme Court allowed the audit to proceed while clarifying that the High Court's observations challenged by Fortis are "tentative and only for the purpose of making out a case for forensic audit" and must not influence the auditor (Fortis Reg 30 filing, 27 September 2026). We rely on the company's account of that order.
On the 4 September call, Fortis's chief executive read the timetable as four weeks for the auditor's information request, two weeks to respond and six months for the report, with the cost borne by Daiichi Sankyo according to Fortis's finance chief (call transcript). On our count that is about seven and a half months from the auditor's start, before any hearing on the findings.
The delay has already cost IHH
IHH's finance chief told the same call that the tender offer was completed only last year, after almost seven years of waiting (call transcript). IHH's subsidiary sued Daiichi Sankyo in Tokyo for losses from that delay; the Tokyo District Court dismissed all its claims with costs on 10 September 2026 (Fortis Reg 30 filing, 11 September 2026), and it appealed to the Tokyo High Court on 24 September 2026 (Fortis Reg 30 filing, 25 September 2026).
Fifty-one per cent is a four-year climb
The promoter group held 31.17% of Fortis at 30 June 2026 (NSE shareholding pattern, June 2026 quarter). Under Regulation 3(2) of SEBI's takeover regulations, a holder at 25% or more may add no more than 5% of voting rights in any financial year without an open offer, and new shares issued by the target count as an acquisition (SEBI SAST Regulations, 2011).
Moving from 31.17% to 51% is 19.83 percentage points on our arithmetic, so four financial years of creeping acquisition at the limit, which fits IHH's three-to-five-year window. On our reading, anything faster means an open offer, priced while the audit runs or soon after it reports.
Four questions before a GCC buyer subscribes for an Indian hospital stake
- Are any of the target's former promoters judgment debtors, or have their pledged shares been enforced in the last five years?
- Has any creditor of a former promoter sought orders touching the company, its share register or its use of new capital?
- If we enter by primary subscription, can we show where every rupee went, as IHH must now show for the RHT purchase?
- What is our path from first tranche to control under SEBI's 5% annual limit, and what does an open offer cost if we move faster?
The Monday work for a GCC buyer of an Indian hospital asset starts with the people leaving it. Pull the target's Regulation 30 litigation disclosures for the last five years, and the outgoing promoters' pledges, enforcement actions and decrees against them personally.
Ask whether any creditor of theirs has ever sought orders over the company's shares or over what the company did with new money. Then model the route to control under Regulation 3(2) before agreeing a price for the first tranche, because the first tranche sets how long the rest takes. That diligence is where our buy-side M&A practice starts.
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