IHH Healthcare Bhd. (IHH), Asia’s biggest hospital operator, raised 6.3 billion ringgit ($2 billion) in the world’s third-largest initial public offering this year, selling shares near the high end of a marketed range.
IHH sold shares at 2.80 ringgit apiece in the Kuala Lumpur and Singapore IPO, the company said today in a statement. It had marketed the stock at 2.67 ringgit to 2.85 ringgit. Institutional investors sought more than 100 times the shares available to them, two people familiar with the matter said.
With IHH’s sale overtaking Banco BTG Pactual SA’s April IPO, Malaysia accounts for two of this year’s three largest first-time offerings, data compiled by Bloomberg show. Felda Global Ventures Holdings Bhd. (FGV), the Malaysian palm oil producer whose IPO raised $3.3 billion last month, has risen 24 percent from its offer price, helping spur enthusiasm for IHH’s sale.
“Malaysia probably lacks this sort of new quality name coming to the market, so obviously there’s quite a bit of clamoring when they do arrive,” said Abdul Jalil Abdul Rasheed, who oversees $3 billion as chief executive officer of Aberdeen Islamic Asset Management Sdn. in Kuala Lumpur. “In a market where other IPOs are pulling out, this is a massive success.”
Facebook Inc.’s IPO was this year’s biggest deal at $16 billion. Shares in the owner of the world’s largest social- networking service dropped 19 percent since the listing, denting demand for other first-time sales and drawing criticism of lead IPO manager Morgan Stanley.
IHH, controlled Malaysia’s state investment company Khazanah Nasional Bhd., reserved 62 percent of its offering for 22 so-called cornerstone investors. They include Malaysian and Singapore state-linked funds as well as companies such as Blackrock Inc. (BLK) and AIA Group Ltd., according to the IPO prospectus. Cornerstone investors agree to hold the stock for a minimum time period in return for guaranteed allocation.
The group has more than 4,900 beds in hospitals in Asia and Turkey under brands including Gleneagles and Parkway, with 3,330 more beds planned over the next five years, according to the sales document. IHH is poised to benefit from increased medical tourism to the region, aging populations and rising wealth in Southeast Asia, the company says.
The fair value of IHH’s shares is 2.98 ringgit with “limited upside,” Public Investment Bank Bhd. said in a report on July 6. At the top end of its indicative range, the company’s price-to-earnings ratio would have been about 67 times estimated 2012 profit, making it one of the most expensive health care stocks in the world, the brokerage said.
U.S. hospital operator HCA Holdings Inc. (GCA) trades at 7.8 times projected 2012 earnings, while South Africa’s Life Healthcare Group Holdings Ltd. (LHC) is valued at 21 times, according to data compiled by Bloomberg.
With an initial market capitalization of as much as 23 billion ringgit, IHH is expected to join the benchmark FTSE Bursa Malaysia KLCI Index on August 1, a week after its July 25 trading debut, FTSE International Ltd. said last week. Felda is also expected to join the index in its next reshuffle.
The gauge closed at an all-time high yesterday, buoyed by resilient domestic demand and development spending in Southeast Asia’s third-biggest economy, including construction of a subway in Kuala Lumpur.
KPJ Healthcare Bhd. is currently the only listed health care company in Malaysia, with a market value of 4 billion ringgit.
“There’s not much liquidity in the industry, so when a good quality company like this becomes available it’s going to draw a lot of interest,” said B. Kemp Dolliver, Singapore-based head of Asia health care research at Religare Capital Markets.
To contact the editor responsible for this story: Philip Lagerkranser at email@example.com