Malaysia-based hospital group IHH Healthcare will divest its 50% interest in Apollo Gleneagles Hospitals in Kolkata and its radiology centre in Hyderabad, India,  to its joint venture partner.

Economic Times reported citing people knowledge with the matter that this divestment by IHH Healthcare is being made to adhere to a non-compete deal. The Malaysian firm secured the bid for debt-laden Fortis Healthcare.

One person told the financial daily: “According to the agreement, any partner who purchases stake in a rival hospital will have to sell their stake to the other partner.

“The IHH acquisition of Fortis for $1.1 billion triggers this clause in the agreement.”

Apollo Gleneagles is a joint venture between IHH subsidiary Parkway Pantai and India-based Apollo Hospitals.

Apollo can make the first refusal over the interest held by its partner.

An IHH spokesperson told the publication: “We will not comment on market speculation.”

Although Apollo Hospitals did not respond to an email from the publication, a senior official told the daily that it wanted the Malaysian company to respond.

The official further added: “IHH has to come to us with an offer. We have not got any indication on how they plan to move forward with this.”

Apollo has commenced raising capital to fund the purchase of IHH’s stake. It is reportedly in advanced negotiations to divest Apollo Munich Health Insurance to HDFC Ltd.

Apollo Munich is a joint venture between Apollo Hospitals and Munich Re. It is claimed to have close to 2% share in the market.