IHH to buy Prince Court for RM1b in cash

The deal is a rare opportunity to acquire an attractive and accretive asset in KL’s ‘Golden Triangle’,
says IHH CEO


IHH Healthcare Bhd’s indirect wholly owned subsidiary, Pantai Holdings Sdn Bhd, has proposed to acquire the entire stake in Prince Court Medical Centre Sdn Bhd (PCMC) from Khazanah Nasional Bhd’s wholly owned subsi- diary, Pulau Memutik Ventures Sdn Bhd (PMV), for RM1.02 billion in cash.

“We are pleased to be adding PCMC to our existing network of 15 hospitals across Malaysia,” IHH CEO designate Dr Kelvin Loh said in a statement yesterday.

He noted that the deal is a rare opportunity to acquire an attractive and accretive asset in Kuala Lumpur’s (KL) “Golden Triangle” that will strengthen IHH’s position in Malaysia, while allowing the multinational healthcare group to capture the growing medical tourism market.

In an exchange filing yesterday, IHH stated that the proposed acquisition will allow the group to strengthen its position in the Malaysian private healthcare segment, broaden its service offerings and leverage on its wide network of hospitals.

In addition, IHH will gain a qualified and experienced medical professional team offering a wide range of services.

IHH also said the purchase consideration will be funded via a combination of internally generated funds and bank borrowings, the proportions of which have yet to be finalised at this juncture.

The funding mix will be determined at a later stage after taking into consideration the internal cash requirements, gearing level and interest costs of IHH and its subsidiaries.

IHH maintained a strong financial position as at end-June 2019 with net cash generated from operating activities of RM1 billion and an overall cash balance of RM5 billion.

Its net gearing stood at 0.15 time. The PCMC deal is the second major investment in the past year by IHH after buying a 31.17% stake in cash-strapped Fortis Healthcare Ltd in India last November for US$584 million (RM2.44 billion).

PMV’s original cost of investment in PCMC was RM1.09 billion incurred on Aug 1, 2018.

The fair market value of the 100% equity in PCMC range from RM960.7 million and RM1.08 billion as at March 31, 2019, as derived by the group’s independent equity valuer PricewaterhouseCoopers Capital Sdn Bhd.

The value was determined based on the income approach, market approach and prospects of PCMC.

Barring unforeseen circumstances and pending regulatory approvals, IHH expects the proposed acquisition to be completed in the first quarter of 2020.

Khazanah, in a statement yesterday, noted that the proposed divestment will enable PCMC to fully benefit from being integrated into IHH’s Malaysian operations and its broader global network.

It would also strengthen IHH’s overall position in the domestic healthcare services market, with Khazanah’s continued contributions through its involvement in IHH.

“This transaction is in line with our refreshed mandate and provides Khazanah with the liquidity for our future investment capital requirements,” Khazanah MD Datuk Shahril Ridza Ridzuan noted.

Khazanah is confident that PCMC will benefit from IHH’s wealth of experience in providing premium healthcare, while solidifying IHH’s position as a leading Malaysian healthcare operator — in which Khazanah remains a substantial shareholder with a 26.04% stake.

IHH closed three sen or 0.53% higher to RM5.69 yesterday, giving it a RM49.92 billion market capitalisation.