Intense interest from investors has pushed the initial public offering (IPO) of IHH Healthcare Bhd up to near the top of its range, at just under RM6.6 billion, making it the world’s third largest IPO this year.
After Facebook, the second highest was of course the runaway success from Felda Global Ventures, which raised RM9.5 billion in its listing on Bursa Malaysia recently.
The state-backed hospital operator’s successful offering is a sign of the growth of the private Asian medical sector, which is booming with our rising middle class increasingly able to spend on healthcare.
And with more than 4,900 beds in 30 hospitals across Asia, IHH and its shareholders stand to reap the rewards.
This latest achievement is a sign too of increasing Malaysian economic diversity, and cements what Reuters described as “Malaysia’s gloom-defying market”.
Two separate sources revealed to Dow Jones Newswires on Thursday that the second biggest IPO in Asia was pricing shares at RM2.80 per share, near the top indicative price of RM2.85.
At RM2.80 per share IHH would have a market value of RM22.5 billion, making it the world’s second-biggest listed healthcare provider after US hospital operator HCA Holdings Inc.
“The majority of the demand comes from domestic and international long-only funds,” a source told Reuters. “International demand is around 60 per cent and there’s little price sensitivity.”
With IHH shares to be listed jointly in Bursa Malaysia and the Singapore Stock Exchange from July 25, Prime Minister Datuk Seri Najib Razak said last week that the IPO marked “very significant progress” for Malaysia.
It is yet another example of Najib’s successful drive to monetise state-linked assets and take the economy to the next level.
Khazanah Nasional’s 62 per cent stake in IHH means that the sovereign wealth fund is expected to gain RM5 billion over its initial investment.
Khazanah Managing Director Azman Mokhtar said the listing would value its stake in IHH at RM11 billion, an 83 per cent jump from its equivalent investment cost of some RM6 billion.
And it’s returns on that scale which will steer Malaysia forward both as an economy and as a nation.
Ernst & Young recently said Bursa Malaysia was the world’s third biggest exchange 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 various factors, but all agree Malaysia’s pre-eminent spot is largely due to strong government support, active domestic pension funds, and growing international investor interest.