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An offering to institutional investors of shares in Malaysia’s IHH Healthcare, one of the biggest initial public offerings this year, has been 132 times subscribed as the country’s IPO market continues to defy global uncertainty.
Demand for the 6 per cent of shares set aside for foreign and Malaysian institutional investors was high enough to set the price at the upper end of the range, at M$2.80 and S$1.13 respectively, two people familiar with the situation said.
IHH is set to be the first concurrent listing on the Kuala Lumpur and Singapore bourses on July 26. It will be the second-largest publicly traded healthcare company after HCA Holdings, which is listed on the New York Stock Exchange, and will raise about $2.5bn.
Malaysia is a rare bright spot in the global IPO market as cash-rich domestic pension funds and other Malaysian investors are supporting big ticket floats, providing encouragement for foreign investors to come in.
Sixty-two per cent of IHH has been taken up by “cornerstone” investors, including Temasek, Singapore’s state investment agency, and BlackRock.
The IPO is also a sign of the growth of the private Asian medical sector, which is profiting from a rising middle class increasingly able to spend on healthcare. Hospitals in Singapore and Thailand are cashing in on growing “medical tourism” by wealthy individuals seeking treatment outside their home country.
Sixty-two per cent of IHH is owned by Khazanah, Malaysia’s sovereign wealth fund; Japanese trading house Mitsui has 26.6 per cent; and Abraaj, a Cayman Islands-incorporated company, has 7 per cent.
Abraaj is the selling shareholder, and traces its ownership through four subsidiaries above it to The Infrastructure & Growth Capital Fund, a Cayman Islands-domiciled private equity fund with 98 partners that are not named in the IHH prospectus.
IHH owns Parkway, the largest healthcare company in Singapore by number of beds. It also has a presence in Malaysia where it is ranked second by number of beds and a majority stake in Acibadem, the largest healthcare company in Turkey.
All three markets “act as important hubs for medical travel within their respective regions”, IHH’s prospectus said.
According to Frost & Sullivan, a consultancy, medical travel revenues generated by patients destined for Singapore are expected to grow at a compound annual growth rate of 14.7 until 2016.
IHH comes only weeks after another big Malaysian IPO, that of palm oil operator Felda, defied market uncertainty to debut higher on its first day on Bursa Malaysia.
Like Felda, IHH is part of a programme initiated by Najib Razak, Malaysian prime minister, to divest government-linked companies in strategic sectors .
Among IHH’s 22 cornerstone investors are the Government of Singapore Investment Corporation, the city-state’s investment agencies; Och-Ziff; AIA, the Hong Kong insurer; Eastspring Investments, Prudential’s asset management business in Asia; and Hotel Properties, run by Ong Beng Seng, the Singaporean tycoon who brought Formula One to the city-state.