Prathap C. Reddy, the 80-year-old founder of India’s biggest hospital operator, is breaking with tradition to avoid the sort of dispute which led to a feud between the nation’s richest brothers.
The chairman of Apollo Hospitals Enterprise Ltd. has formed a team to draft a will, a process which many Indians believe to be inauspicious as it is associated with preparations for death. The seven-member family council includes Reddy, his four daughters and two professional advisers, he said in an interview in the southern city of Chennai.
Reddy’s plan to apportion the family fortune valued at about 38.5 billion rupees ($714 million) follows the 2004 fallout between billionaire brothers Mukesh and Anil Ambani that led to the division of the Reliance group after their father died intestate. The rich in India are increasingly drafting the document after the Ambani dispute, said Gaurav Jaggi, senior associate with Vaish Associates Advocates, who gets five inquiries a month compared with one a quarter five years ago.
“We are talking to the next generation on the future course of action,” Reddy said. “Other investors who are with us have completely supported us. But between the family, everybody asked what next.”
In 2005, Mukesh and Anil split the oil-refining, chemicals and mobile-phone services group after a seven-month long ownership fight at Reliance Industries Ltd., founded by their father Dhirubhai Ambani.
Mukesh, ranked the world’s 17th richest man with assets valued at $27.1 billion according to the Bloomberg Billionaires Index, retained control of the flagship, while younger brother, Anil, took power, mobile-phone services and financial services.
Kokilaben, widow of Dhirubhai, mediated a settlement between the brothers. Anil has assets valued at $8.5 billion.
Preparing the document isn’t popular among Hindus, who believe that “if you write your will you will die,” said New Delhi-based Jaggi. “I am hearing this for the last 10 years from many influential people.”
Wills written by Hindus, the dominant community in India, Sikhs, Buddhists, Parsis and Christians, are governed by the Indian Succession Act of 1925, while the followers of Islam adhere to the Muslim Personal Law.
If someone doesn’t leave a will, by default the property goes to the legal heirs, said K. Bhawatharini, a lawyer practicing in Chennai.
Reddy, a trained cardiologist, who started Apollo as a 150 bed hospital in Chennai in 1983 after a stint at the Missouri State Chest Hospital, said the family council may come up with a plan for his assets in the next one to two years.
Apollo, which counts private-equity fund Apax Partners LLP as an investor, manages 8,500 beds across 50 hospitals, runs 1,350 pharmacies, 100 primary care and diagnostic clinic and 100 telemedicine units across 9 countries.
IHH Healthcare Bhd., an arm of Malaysia’s state investment company Khazanah Nasional Bhd., holds about 11 percent of Apollo, according to its website. The Indian chain sold shares in an initial public offering in 1983.
An orderly transfer of assets may help Apollo focus on expansion to tap clients from overseas as well as at home. Medical tourism to India is growing 25 percent a year, according to Firstcall India Equity Advisors Pvt. Rising urbanization in the world’s second-most populous nation is leading to an increase in lifestyle diseases, boosting demand for Apollo’s services.
Reddy, along with his family controls 35 percent of Apollo, valuing the stake at 38 billion rupees. The family and Apollo also own 51 percent of Indraprastha Medical Corp.
The hospital service provider’s shares have more than doubled in the past five years. They gained 1.5 percent to 789.95 rupees in Mumbai. Apollo Hospitals’ profit may rise to 30 percent to a record 2.99 billion rupees in the 12 months ending March 31, according to a median estimate of five analysts compiled by Bloomberg.
While Reddy is planning a will, he already has a succession plan in place. His eldest daughter Preetha, who is the managing director of the hospital, will succeed him and the “other sisters have accepted that,” he said.
“All the siblings have been in the business for quite a long time,” said Siddhant Khandekar, an analyst with ICICI Direct. “The reins are going to be in stable hands.”
Second daughter Suneeta is the joint managing director, while the third Shobana Kamineni is executive director for new initiatives. The youngest sibling Sangita is the executive director for operations.
“Whenever I step down, she is ready to take the mantle,” Reddy said. “I don’t think there is any controversy in that,” he added. Preetha was ranked in the list of “50 Most Powerful Women in Business” by Fortune magazine in 2010 and 2011, according to the company’s website.