Harry’s Apollo: Why did Indian owners give in?

By Duruthu Edirimuni

Business tycoon Harry Jayawardene finally succeeded in acquiring the Apollo Hospital in Colombo through his Sri Lanka Insurance Co (SLIC) in a hostile battle that drew the Sri Lankan and Indian governments to the rescue of the Indian parent company but questions abound about the final deal.

SLIC raised its stakes to more than 60 percent in the Apollo Colombo’s owning company, Lanka Hospitals Corporation Ltd (LHCL). This came after its mandatory offer in late July to buy a near 60 percent of the hospital shares, ended on Thursday with LHCL selling out its stakes without much fuss – though a bitter fight to resist the takeover dragged in the Indian and Sri Lankan governments.

Many questions however remained unsatisfactorily unanswered as to why Apollo India gave in without the defiance it showed when SLIC made the mandatory offer. Was Apollo suddenly attracted by an under-the-table deal or forced into submission by threats of exposure on some wrongdoing in the accounts and management issues?

Indian High Commissioner Nirupama Rao, who intervened and appealed to the Sri Lankan government to protect a flagship Indian investment, was away in New Delhi probably preparing for her next assignment as India’s ambassador in China. A spokesperson at the Colombo mission said, “If an Indian investor feels that a worthwhile offer has been made and he accepts it, then it is fine. The High Commissioner has no personal views on this matter.”

Board of Investment (BOI) Chairman Lakshman Watawala’s statement was even more vague and suggested the agency was finding an escape route after a threat earlier to withdraw all BOI concessions if there was a change in the ownership.