Khazanah could see RM5b gain from IHH IPO
KUALA LUMPUR, July 3 — Khazanah Nasional Berhad could see returns of nearly double its initial investment in IHH Healthcare Berhad when the hospital group is listed later this month, said the state asset manager today.
Khazanah managing director Tan Sri Azman Mokhtar said at the launching of IHH’s prospectus here that at the proposed IPO price of RM2.85, Khazanah’s stake in the group would be valued at RM11 billion compared with its equivalent investment of RM6 billion.
He also said that healthcare would account for 10 per cent of Khazanah’s portfolio post the IHH listing and therefore better reflect industries that would be in demand in the future.
Khazanah has a 62 per cent stake in IHH built up over the years from its investments in India’s Apollo Hospitals, Malaysia’s Pantai, Singapore’s Parkway and Turkey’s Acibadem.
Post-listing, Khazanah will hold a 47.78 per cent stake in the hospital operator.
CIMB CEO Datuk Seri Nazir Razak, whose bank is adviser to the deal, declined to comment at a press conference on the apparently high valuation of the hospital group’s shares, which at an indicative price of RM2.85 was reported to be 93 times 2011 earnings compared with 15.3 times on average for hospital operators in emerging Asia.
Nazir however noted that the IPO has lined up a list of 22 well-known institutional cornerstone investors who saw value in IHH shares.
He brushed aside concerns surrounding the timing of the IHH IPO despite the weakness experienced in other major markets which saw IPOs such as Ferrari’s proposed US$3 billion (RM9.3 billion) flotation in Singapore being postponed.
“It does seem like Malaysia is almost an oasis,” he said, referring to FELDA Global Venture Holding’s IPO last week which soared nearly 20 per cent on its first day of trading.
Nazir noted that 78 per cent of the 2.24 billion shares have been pre-allocated to cornerstone investors and Bumiputera investors identified by the Ministry of International Trade and Industry.
“We go into this deal with good momentum,” he said. “We look at this as a long-term investment story that can weather any market.”
IHH could raise up to RM6.4 billion, the third highest amount from an IPO this year behind last week’s FELDA Global Ventures Holdings and Facebook in the US.
It is offering 2.235 billion shares of which 62 per cent has been allotted to cornerstone investors and 16 per cent to Bumiputera investors nominated by the Ministry of International Trade and Industry.
Of the remaining 22 per cent, 208 million shares will be offered in Malaysia and 141 million in Singapore to retail investors. A further 138 million will be sold to international and local institutions.
When listed, IHH is expected to have a market capitalisation of RM23 billion or S$9.5 billion, the second largest in the world for a private healthcare provider behind HCA Holdings, which is listed in New York.
IHH operates the Parkway Pantai chain of 16 hospitals, which has over 3,000 beds and 60 medical centres, clinics and ancillary healthcare businesses.
It also has a majority stake in Acibadem, which operates a network of 14 hospitals in Turkey.