Wednesday August 8, 2012
IHH Healthcare makes global impact and is 2nd largest in the world by market capitalisation
WHILE IHH Healthcare Bhd recently made news because of the size of its July flotation and the fact that it was dual-listed, the story tracing the journey of the creation of this gigantic hospital group is just as riveting.
IHH, created and owned by the Government's investment arm Khazanah Nasional Bhd, is today the world's second-largest hospital group by market capitalisation. It is only second to US group Hospital Corp of America (HCA) whose operations are largely within the confines of the US market.
As such Malaysian-owned IHH is today, the largest hospital group, outside the United States.
Clearly, a lot of planning and astute execution had gone into the creation of IHH. Growing so big organically within that space of time would have been next to impossible, say industry observers.
What some analysts also reckon is that it will be very challenging to repeat this feat.
“Any other group seeking to have so many bolt-on acquisitions in such a span of time may find it challenging due to issues such as pricing and the availability of assets to be acquired,” says one analyst.
IHH today has over 4,900 licensed beds in 30 hospitals across eight countries.
Its dual listing on Bursa Malaysia and Singapore Exchange was the world's third largest this year with some RM5.13bil raised.
As far back as in 2005, Khazanah had identified healthcare as a core investment sector. That year marked Khazanah's first foray into healthcare when it bought a 13.2% stake in India's largest private hospital group, Apollo Hospitals Enterprise.
It was bought for RM165mil cash and back then, Apollo was already present in Sri Lanka, Bangladesh, the United Arab Emirates, Nepal, Ghana, Nigeria, the United Kingdom and Saudi Arabia.
On Aug 28, 2006, Khazanah emerged as a substantial shareholder of Pantai Holdings Bhd and soon owns 100% of the Malaysian hospital group.
In 2007, Khazanah acquired IMU Health Sdn Bhd, which runs the private medical university.
Khazanah then noted that the acquisition of IMU addressed a strategic national objective in terms of the training of high quality medical personnel in Malaysia, particularly doctors and nurses.
The education institution later expanded via an acquisition of a nursing training centre, Pantai College, in April 2012.
Also in 2006, Khazanah bought a 23.2% stake in Singapore-listed Parkway Holdings Ltd, which made it the largest shareholder. Khazanah took Parkway off the market in 2010 after paying S$3.5bil (RM8.6bil) for the 76.1% it did not own. It fought a tough corporate battle against the Fortis Healthcare group in Singapore.
Later Khazanah took out the concession assets in Pantai and injected the remaining 60% into IHH. It also injected 100% of IMU and 13% in Apollo Hospital Group of India into IHH.
In February last year, Khazanah divested 30% of IHH to Mitsui Co Ltd. Mitsui paid RM3.3bil for its stake.
After having control of Malaysia and Singapore's premium healthcare providers, the sovereign fund continued to expand to south-eastern Europe. This year, IHH acquired a 75% stake in Acibadem for RM3.7bil. Acibadem is Turkey's largest private healthcare provider with a network of 14 hospitals across Turkey and Macedonia.
IHH, through its subsidiaries, also has healthcare operations and investments in China, India, Hong Kong, Vietnam and Brunei.
In a previous interview with StarBiz, IHH managing director Dr Lim Cheok Peng said that the rich valuation for IHH was justified as the healthcare provider group had strong earnings and market growth prospects over the next five years.
Lim reiterated that in the pipeline were more than 3,300 new beds to be delivered and 17 hospital developments, which would be completed by end-2016.
So as the IHH journey continues, it should be regarded as one of the more significant home-grown creations whose wide coverage puts in the league of global players.