Religare Health Trust

Religare Health Trust: pg 2 -6 of the final prospectus offers very good summary information about the Trust. Link here: http://masnet.mas.gov.sg/opera/sdrprosp.nsf/e25d3309aa11eacd48256f64000f86d1/BF9D47B56DEC71BA48257A98003F2F1C/$File/Religare Health Trust (151012).pdf (http://masnet.mas.gov.sg/opera/sdrprosp.nsf/e25d3309aa11eacd48256f64000f86d1/BF9D47B56DEC71BA48257A98003F2F1C/$File/Religare Health Trust %28151012%29.pdf) Our brief thoughts are as follows, - Hard to be overly excited about the present fundamentals of the stock. - Investors may remember the bad experience with prior Indian company listings, eg. AIT, Indiabulls Properties, Meghmani, all of which have been poor performers since IPO. - Forex risk is increased given the steady and significant depreciation of the INR vs SGD over the past 5 yrs. - The redeeming consideration is RHT’s healthcare and high yield status, given positive sentiment in the healthcare sector and low interest rate environment. - Valuations however are not cheap at 1x P/B. - Yields at ~9% are high at first blush, but do not compensate well for Indian asset exposure. Further, yields have been temporarily enhanced by the sponsor’s waiver of distributions till FY14. - However, the key upside risk lies in RHT’s pedigree sponsor, Fortis Healthcare. - The investor is essentially paying for growth, as RHT is offered first right of refusal over Fortis’ healthcare assets. Fortis has publicly said it would pursue an asset-light strategy (ala Parkway, CapitaLand style). In a blue-sky scenario, RHT could have a pipeline that effectively boosts the no. of healthcare properties it owns by approx 7-fold, and diversifies its geographical exposure across 10 countries in Asia Pac.