IHH Healthcare Bhd (IHHH.KL) Asia's largest hospital operator, priced its $2.1 billion initial public offering near the top of an indicative range as strong investor interest in the third biggest IPO of 2012 reinforced Malaysia's gloom-defying market.
Confirming an earlier Reuters report, IHH said it had fixed the cornerstone, institutional and final retail price for its concurrent listing on Malaysia and Singapore bourses at 2.80 ringgit/S$1.113 per share, at the upper end of the indicative range of 2.67-2.85 ringgit per share.
"We are delighted with the response that the IHH IPO has received," managing director Lim Cheok Peng said in a statement on Thursday. "We believe it underscores the strength and quality of our offering, as well as the depth of investor interest in the opportunities we present."
IPOs in Malaysia, where the government has a heavy hand in the economy and the equity market is dominated by local investors and large domestic pension funds, have defied a trend in financial markets such as Singapore, where motor racing firm Formula One decided to postpone its near $3 billion flotation.
The world's biggest listing this year after Facebook Inc (FB.O) and Felda Global Ventures Holdings Bhd (FGVH.KL), IHH has attracted investors ranging from sovereign wealth fund Kuwait Investment Authority to International Finance Corp IFK.UL, the private investment arm of the World Bank.
IHH will debut on the Malaysian and Singaporean bourses on July 25.
At 2.80 ringgit per share IHH would have a market value of 22.5 billion ringgit ($7.2 billion), making it the world's second-biggest listed healthcare provider after U.S. hospital operator HCA Holdings Inc (HCA.N).
"The majority of the demand comes from domestic and international long-only funds," said a source familiar with the deal. "International demand is around 60 percent and there's little price sensitivity."
REGIONAL HEALTHCARE PLAY
The healthcare arm of Malaysia's state investor Khazanah Nasional, IHH is one of the few available plays on the healthcare sector in the region, where rising incomes and an expanding middle class are boosting demand for better services.
Thailand's Bumrungrad Hospital PCL BH.BK recently saw its entire 25 percent stake worth around $143 million in Bangkok Chain Hospital snapped up through an accelerated book-build in just a few hours.
With its dual listing in Singapore, IHH joins Kuala Lumpur-listed KPJ Healthcare Bhd (KPJH.KL), Singapore's Raffles Medical Group (RAFG.SI), Bangkok Dusit Medical Services BGH.BK and India's Fortis Healthcare (FOHE.NS) among major listed Asian health-service providers.
IHH's IPO consists of 2.23 billion shares with an over-allotment option of up to 170 million shares, putting the total offering at $2.1 billion.
IHH, which counts Japan's Mitsui & Co (8031.T) 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 (ACIBD.IS), Singapore's Parkway Holdings and India's Apollo Hospitals Enterprise Ltd (APLH.NS) to its local holdings Pantai Hospitals and International Medical University.
"In terms of scale it is unprecedented. On valuation it is not cheap," said Chua Jen-ai, a Singapore-based equity analyst at Swiss wealth manager Julius Baer, speaking before the pricing was confirmed.
"The valuation at the high end gives the benefit of doubt to IHH's execution and if the earnings fall short -- for example if growth in Turkey or the earnings ramp up at the new Mount Elizabeth Novena (in Singapore) are less-than-expected -- then the IPO would seem a bit expensive."
IHH's listing will cement Malaysia as the Asia-Pacific region's hottest new issue market this year, outpacing both Shenzhen's ChiNext board and traditional IPO giant Hong Kong.
Felda's successful debut late last month came in sharp contrast to the tumble in equity capital markets activity and pulled deals in Hong Kong, London and Singapore.
Bank of America-Merrill Lynch (BAC.N), CIMB (CIMB.KL) and Deutsche Bank (DBKGn.DE) are the lead global coordinators for the IHH listing, with Credit Suisse (MLPN.P), DBS (DBSM.SI), Goldman Sachs (GS.N) and Maybank (MBBM.KL) acting as joint bookrunners.
This article is copyrighted by Reuters
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