IHH eyes China, India assets after IPO
UPDATED @ 06:40:36 PM 05-07-2012
KUALA LUMPUR, July 4 — IHH Healthcare Bhd, Asia's largest hospital operator, will look to buy assets in China and India with their billion-plus populations after the Malaysian firm uses its IPO proceeds to pay down debt, a top company official said on Wednesday.
IHH's $2 billion stock debut on the Malaysian and Singaporean bourses on July 25 will give it a market value of 22.9 billion ringgit ($7.24 billion), making it the world's second biggest listed healthcare provider after HCA Holdings .
It plans to grow by owning and operating hospitals in China, while looking at brownfield and greenfield joint-ventures and acquisitions on the northern and western regions of India, IHH Managing Director Lim Cheok Peng said.
"They have among the largest populations in the world," Lim told Reuters in an interview in the Malaysian capital. "The healthcare infrastructure is not up to standard at this point in time and coverage is not universal, this is why we want to penetrate these markets."
IHH is looking to add in another 17 new hospitals with 3,300 beds by 2015, boosting its total hospitals to 47 with 8,200 beds, according to Lim.
About 75 per cent of the 6.5 billion ringgit capital expenditure for the expansion has been paid for, with the remainder to be funded via the IPO proceeds, he added.
The group posted a profit of 394.117 million ringgit in 2011 versus 574.754 million in 2010 - a drop of 31 per cent on higher staff costs.
IHH, the healthcare arm of Malaysia's state investor Khazanah, will use around 90 per cent, or 4.66 billion ringgit, of its IPO proceeds to repay borrowings in 12 months.
That will save some 120 million ringgit ($37.8 million) in interest payments and allowing the firm to gear for further expansion, Lim said.
Total debt stood at around $2.4 billion as of the end of March, according to company data.
IHH also holds a 35.8 per cent stake in Parkway Life real estate investment trust (REIT), one of Asia's largest healthcare REITs with 36 properties in total.
"With the IPO and subsequently the paring down of debt level, there is more room for us to gear, we also have a REIT that at some point in time we can utilize to monetise our fixed assets," he added.
Lim also said IHH would pay a dividend when it is appropriate.
"While it is a defensive stock, it is also a growth stock. For the benefit of both shareholders and company, there has to be a balance," he said. "If we don’t need the money for expansion, we will give it back to the shareholders."
IHH's assets include Singapore hospital operator Parkway Holdings, Turkish hospital group Acibadem AS, India's Apollo Hospitals Enterprise Ltd and Malaysia-based Pantai Hospitals and International Medical University.
"We are truly the first healthcare company that covers multiple geography," said Lim. "Even you take HCA, the largest in the world, they are country-centric, they are only based in America." — Reuters