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. Palm oil producer Felda 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 rose 1.2 percent in June, its steepest monthly gain since March, and closed at a record today amid resilient domestic demand and private investment. Domestic equity offerings jumped by almost threefold in the first half of this year to 10.8 billion ringgit, with Malayan Banking Bhd. leading Bloomberg’s underwriter league table with a 25 percent market share.
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.
“Markets will be markets, but we are confident with the timing,” Nazir Razak, chief executive officer of IPO manager CIMB Group Holdings Bhd., told reporters in Kuala Lumpur today. “We have good momentum here and people are looking at a long- term investment story.”
Najib Razak, Malaysia’s Prime Minister and Nazir’s brother, formally released the prospectus in Kuala Lumpur today. Ahmad Shahizam Mohd Shariff, IHH’s head of business development, declined to comment on the price range, according to a spokeswoman for the company.
The group plans to sell as many as 2.23 billion shares, according to the prospectus filed with Singapore regulators yesterday. IHH may have a market capitalization of 23 billion ringgit when it begins trading on July 25, according to a company statement.
The company has more than 4,900 beds in 30 hospitals under brands including Gleneagles and Parkway, with operations and investments spanning much of Asia, including Malaysia, Singapore and India, according to its prospectus.
The group, which also has interests in Turkey, plans 3,300 more beds through new hospital developments and expansion of existing facilities over the next five years, the document shows.
“We are not looking at any new acquisitions,” Lim Cheok Peng, IHH’s managing director, told reporters in Kuala Lumpur today. “Our plates are full.”
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. Credit Suisse Group AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. were among banks picked to arrange this sale, two people with knowledge of the matter said today.
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 plan said last month.
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 18 percent since the IPO, while GT Capital is up 14 percent from its offer price.