M'sia grabs Asia IPO top spot with IHH listing

KUALA LUMPUR: Malaysia launched today the US$2 billion initial public
offering of state-backed hospital operator IHH Healthcare Bhd, marking
the third biggest listing of the year globally and cementing its status
as Asia's top IPO destination for 2012.

The sale of shares in
IHH follows the US$3 billion listing on the Malaysian bourse last week
of palm oil firm Felda Global Ventures Holding, which was the world's
biggest IPO of the year after Facebook Inc.

The IHH IPO
prospectus was launched at an event in Kuala Lumpur, continuing Prime
Minister Datuk Seri Najib Razak's drive to monetise state-linked assets
and boost the economic feel-good factor ahead of a general election due
by next March.

CIMB Group chief executive Nazir Razak, head of
the investment bank that is lead global co-ordinator of the listing,
said IHH's market value of RM22.9 billion (US$7.24 billion) based on an
indicative IPO price of RM2.85 per share would place it second to HCA
Holdings - the world's largest listed healthcare provider.

"Malaysia
looks set to be Asia's top IPO market this year, a testament to both
the quality of companies being listed and the resilience of the
Malaysian equity market," Nazir told reporters.

IPOs in
Malaysia, where the equity market is dominated by local investors and a
large domestic pension fund system, have defied a trend in financial
markets such as Singapore, where motor racing firm Formula One decided
to postpone its near US$3 billion flotation.

As a result, Kuala Lumpur has been running neck-and-neck with China's Shenzhen as Asia's top IPO destination.

Sovereign
wealth fund the Kuwait Investment Authority, asset manager Blackrock
and 20 other big "cornerstone" investors have committed to buy nearly
two-thirds of the shares on offer.

But some investors warned Malaysia's top dog IPO status was unlikely to last long.

"Malaysia
is now the largest IPO market in Asia and surely that is not
sustainable," said Abdul Jalil Abdul Rasheed, chief executive officer
of Aberdeen Islamic Asset Management Sdn in Kuala Lumpur.

"I think it's just that Malaysia is probably having some time in the sun now that other markets are quite weak."

IHH,
the healthcare arm of Malaysia's state investor Khazanah Nasional, is
one of the few available plays on the healthcare sector in the region,
where rising incomes are stimulating demand for better services.

With
its dual listing in Singapore, IHH joins the likes of Kuala
Lumpur-listed KPJ Healthcare Bhd, Singapore's Raffles Medical Group,
Bangkok Dusit Medical Services and India's Fortis Healthcare.

IHH,
which counts Japan's Mitsui and Co and Dubai-based Albraaj Capital as
shareholders along with Khazanah, embarked on an aggressive overseas
shopping spree in recent years.

It added Turkish hospital
group Acibadem AS, Singapore's Parkway Holdings and India's Apollo
Hospitals Enterprise Ltd to its local holdings Pantai Hospitals and
International Medical University.

Khazanah managing director
Azman Mokhtar said the listing would value its stake in IHH at RM11
billion, an 83 per cent jump from its equivalent investment cost of
some RM6 billion.

"The listing will help to underpin the various
governments' sectoral and economic ambitions," said Azman in an earlier
speech to investors at the launch.

"This includes healthcare as
one of the key sectors in Malaysia, promotion of Singapore as a
regional and global healthcare hub and Turkey and India as significant
and vibrant domestic and medical tourism destinations."

IHH
has made no mention of plans to use the IPO proceeds for further
acquisitions. It said in its draft Singapore prospectus it would use
RM4.66 billion (US$1.5 billion) to pay down debt, saving some RM120
million (US$37.8 million) in interest payments.

Total debt stood at around $2.4 billion as of the end of March.

A
strong domestic market could see IHH make a stronger trading debut than
Felda Global's 20 per cent first day pop when the firm lists on July
25, due in part to its defensive appeal, local investors say.

"IHH
offers less to the public and institutional investors (10.52 per cent)
than Felda (26.9 per cent), how difficult is it for it to perform the
same as Felda?" said a senior official with a Malaysian bank-backed
fund management firm.

The institutional price and final retail price is expected to be fixed on July 12.

The
22 cornerstone investors, who also include International Finance Corp,
the private investment arm of the World Bank, will buy 1.39 billion of
the 2.23 billion shares on offer - just over a quarter of the company -
the biggest take-up by such investors of any recent major offering in
the region.

Up to 1.8 billion new shares in the IPO are on
offer, while Abraaj Capital will sell 434.7 million shares in the dual
Kuala Lumpur and Singapore listing, the draft prospectus showed.

The
group posted a profit of RM394.117 million in 2011 versus 574.754
million in 2010 - a drop of 31 per cent on higher staff costs.

CIMB,
Deutsche Bank and Bank of America-Merrill Lynch are the lead global
co-ordinators, with Credit Suisse, DBS, Goldman Sachs and Maybank
acting as joint bookrunners in the IPO. -- REUTERS