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Malaysia’s IHH seeks to raise $2 billion in IPO

Kuala Lumpur skyline/AFP

KUALA LUMPUR, Jul 3 – Malaysia’s IHH Healthcare said Tuesday it plans to raise more than $2.0 billion from an IPO in Kuala Lumpur and Singapore this month, in the world’s third-biggest stock market flotation this year.

The IPO (initial public offering) from Asia’s largest hospital operator, with a target date of July 25, means Malaysian companies will have had two of the biggest public offerings this year.

Oil palm plantation giant Felda Global’s stock market launch last week raised $3.25 billion and was the second biggest of 2012 after Facebook’s disastrous debut, and came after several flotations were delayed in Asia amid deteriorating global conditions.

In its prospectus unveiled Tuesday, IHH Healthcare said it plans to raise 6.37 billion ringgit ($2.01 billion) by offering 2.23 billion shares on the Kuala Lumpur and Singapore stock exchanges.

The initial price for each share is set at 2.85 ringgit or 1.18 Singapore dollars. The firm, owned by Malaysian sovereign wealth fund Khazanah Nasional, said it would determine the final stock price on July 12 ahead of its listing.

The listing could see IHH valued as the second largest listed private hospital operator in the world, Malaysian Prime Minister Najib Razak said at the launch.

It is the first concurrent offering across two Southeast Asian stock exchanges, with 209 million shares earmarked for the Malaysia public offering and 141 million for Singapore.

Twenty-two so-called cornerstone investors, including international fund managers, have already committed to buying more than 60 percent of the stock, while the rest are for institutional placement.

Najib said the listing marked “very significant progress” in the country’s plans to divest government-owned companies.

“Our explicit strategy and objective is to support Malaysian businesses to become regional and global companies — and with this listing IHH can further cement its role as a leading force in the global healthcare sector,” he said.

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IHH has ventures in several countries including Malaysia, Singapore and Turkey.

On its debut on the Kuala Lumpur exchange, Felda shares jumped nearly 20 percent to open at 5.39 ringgit ($1.69), defying global economic uncertainly and proving a contrast to Facebook’s debut.

The social networking giant raised $16 billion from its IPO in May but its shares have since plummeted.

Global accountancy firm Ernst and Young has said the Kuala Lumpur exchange, Bursa Malaysia, was the third-biggest in terms of funds raised in IPOs in the second quarter of 2012, following NASDAQ and the New York Stock Exchange.

Analysts put the success down to factors including government efforts to encourage IPOs and boost the economy as elections approach, and a push to divest state-owned firms to woo foreign investors, as in the case of Felda.

The volatile economic environment has forced the delay of other major public offerings in Asia, including a planned $2.5 billion Formula One listing in Singapore.

IHH is planning to use most of the gross proceeds from the exercise to repay borrowings within the next year, according to a press statement.

The company is scheduled to open a hospital in Singapore this month, as part of its strategy to expand in its home markets of Singapore, Malaysia and Turkey.

It also plans to be a leading healthcare provider in China through a “strong base” in Shanghai and has a new hospital joint venture in Mumbai, India, scheduled to open at the end of this year, according to IHH chairman Abu Bakar Suleiman.

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