Another Giant IPO - Malaysia’s IHH Healthcare Said To Seek $2 Billion In IPO

IHH Healthcare Bhd. (IHH), Asia’s biggest hospital operator, plans to raise as much as 6.4 billion ringgit ($2 billion) in its initial public offering in Malaysia and Singapore, two people familiar with the matter said yesterday.

The Kuala Lumpur-based company, which has signed up 22 so- called cornerstone investors including Blackrock Inc., set an indicative price range of 2.67 ringgit to 2.85 ringgit per share for institutions, said the people, who declined to be named as the information is private. IHH is controlled by Malaysia’s state investment company Khazanah Nasional Bhd.

Malaysia has withstood a global IPO slump, with Felda Global Ventures Holdings Bhd. (FGV) raising $3.3 billion last month in the world’s largest first-time sale since Facebook Inc. Felda, the world’s third-biggest oil palm planter, jumped 16 percent in its Kuala Lumpur debut last week after institutional demand for shares exceeded supply by more than 40 times in the offering.

“The government may want to ride the good momentum of Felda, which had a very successful IPO,” said Josef Schuster, founder of Ipox Schuster LLC, which invests in global IPOs. “It’s also a value play as most of these privatization deals are priced at a discount like what we saw in Felda.”
The benchmark FTSE Bursa Malaysia KLCI Index touched an intraday record last month. Globally, IPOs fell 34 percent to $41.3 billion last quarter as Facebook’s disappointing debut and worsening economic conditions rattled investors, causing companies including Graff Diamonds Corp. to halt or delay offerings elsewhere.

Expansion Plans
Ahmad Shahizam Mohd Shariff, IHH’s head of business development, declined to comment on the price range, according to a spokeswoman for the company. Malaysian Prime Minister Najib Razak will formally release the prospectus in Kuala Lumpur today, according to a media invitation. The group plans to sell as many as 2.23 billion shares, according to the prospectus filed with Singapore regulators yesterday.
IHH has more than 4,900 beds in 30 hospitals under brands including Gleneagles and Parkway, according to the prospectus.
Its operations and investments span much of Asia including Malaysia, Singapore, China, India and Hong Kong, with more scheduled for Turkey. It plans 3,300 more beds through new hospital developments and expansion of existing facilities over the next five years, according to the document.
“There’s a lot of interest for unique assets like health care in Southeast Asia,” Schuster said. “Health-care assets are very attractive globally because of their earnings power in the middle- and long-term.”

Cornerstone Investors
IHH has reserved 62 percent of its IPO for cornerstone investors who must hold the shares for a minimum 180 days, according to the sales document. This includes the Government of Singapore Investment Corp., Temasek Holdings Pte’s Fullerton Fund Management Co. and Malaysian billionaire T. Ananda Krishnan’s Usaha Tegas Sdn., it said.
Southeast Asia is weathering a slump in initial share sales better than markets including Hong Kong, as optimism about the region’s economic outlook draws investors to offerings in Malaysia, Thailand and the Philippines.
Among share sales planned for 2012 in Malaysia, Ananda Krishnan is considering a $1.5 billion offering for the local operations of pay-TV broadcaster Astro All Asia Networks Plc, a company official said in March. Malakoff Bhd., the country’s largest independent power producer, is inviting proposals from banks to raise about $1 billion, two people with knowledge of the matter said last month.

Economic Support
Economic growth in Southeast Asia may accelerate to 5.2 percent this year from 4.6 percent in 2011 amid a recovery in Thailand, according to an April forecast by the Asian Development Bank. Gross domestic product may expand 5.7 percent in 2013, the bank said.
While Malaysia’s expansion slowed to 4.7 percent in the first three months from 5.2 percent the previous quarter, central bank Governor Zeti Akhtar Aziz said June 7 that “very robust” consumption and private investment will help the economy.
At the same time, China and India are losing steam. China cut borrowing costs on June 7 for the first time in three years after five straight quarters of slowing growth. India’s expansion has eased to almost a decade-low.
Thailand, whose economy was ravaged in 2011 by the worst floods in almost 70 years, had its biggest IPO since 2006 when Tesco Lotus (TLGF) Retail Growth Freehold & Leasehold Property Fund, controlled by Tesco Plc’s Thai unit, raised 18.4 billion baht ($583 million) in March. In the Philippines, GT Capital (GTCAP) Holdings Inc., owned by billionaire George Ty, raised 18.8 billion pesos ($449 million) in April in the country’s fourth-largest IPO ever.
Tesco Lotus shares have advanced 19 percent since the IPO, while GT Capital is up 12 percent from its offer price.