Khazanah to sell Prince Court
Fund inks Rm1.02bil share purchase deal with IHH
PETALING JAYA: In line with its revised mandate, Khazanah Nasional Bhd has proposed to divest its 100% stake in Prince Court Medical Centre Sdn Bhd (PCMC) to its healthcare platform, IHH Healthcare Bhd, for a cash consideration of Rm1.02bil.
In a statement yesterday, the sovereign wealth fund said its wholly owned indirect subsidiary – Pulau Memutik Venture Sdn Bhd (PMV) – had signed a share purchase agreement with Pantai Holdings Sdn Bhd, which in turn is a wholly-owned subsidiary of IHH, for the related-party transaction (RPT) involving 100 million ordinary shares and 35,176 redeemable preference shares in PCMC.
Khazanah, through PMV, owns a 26.04% stake in IHH. Khazanah said the proposed divestment would allow the premium private healthcare provider to benefit from being integrated into IHH’S Malaysian operations and its broader global network.
IHH, on the other hand, would see its overall position in the domestic healthcare services market being strengthened, particularly with Khazanah’s continued contributions through its involvement in IHH.
Commenting on the RPT, Khazanah managing director Datuk Shahril Ridza Ridzuan said: “This transaction is in line with our refreshed mandate and provides Khazanah with the liquidity for our future investment capital requirements.
“In addition, Khazanah is confident that PCMC would further benefit from IHH’S wealth of experience in providing premium healthcare, while solidifying IHH’S position as a leading Malaysian healthcare operator, where we remain as a substantial shareholder with a 26.04% stake.”
Meanwhile, in a separate statement, IHH said the proposed acquisition of PCMC would allow the group to strengthen its position in the Malaysian private healthcare segment and broaden its service offerings.
The acquisition would also add to the group’s clinical talent pool, and allow IHH to gain a larger share of the growing medical tourism market in the Klang Valley. In addition, the proposed acquisition is expected to allow IHH to leverage on its wide network of hospitals to deliver potential synergies.
Commenting on the proposed deal, IHH CEO designate Dr Kelvin Loh said: “This is a rare opportunity to acquire an attractive and accretive asset in Kuala Lumpur’s ‘Golden Triangle’ that would strengthen IHH’S position in Malaysia, while allowing us to capture the growing medical tourism market.”
Barring unforeseen circumstances and pending regulatory approvals, the proposed acquisition would be completed in the first quarter of 2020.
IHH said it expects the strong-performance of PCMC to contribute positively to the future earnings and cash flows of the enlarged group following the completion of the proposed acquisition.
IHH said it planned to fund the proposed acquisition through a combination of internally generated funds and bank borrowings.
PCMC operates Prince Court Medical Centre, a 277-licensed bed private healthcare facility in a six-storey purpose-built private medical hospital at the intersection of Jalan Tun Razak, Jalan Bukit Bintang and Jalan Kia Peng.
As at Dec 31, 2018, PCMC had posted a net profit of Rm51mil, while its net assets stood at Rm486.1mil.
PCMC’S revenue increased to Rm260mil in the financial year ended Dec 31, 2018 (FY18) from Rm211.3mil in FY16, representing a compounded annual growth rate (CAGR) of 10.93%, mainly due to the renegotiation of supplier contracts and control over administrative expenses.
Its earnings before interest, tax, depreciation and amortisation grew to Rm44mil for FY18 from Rm25.4mil in FY16, representing a CAGR of 31.62%.
It was noted that PMV’S original cost of investment in PCMC was Rm1.09bil, which was incurred on Aug 1, 2018.
In March last year, Khazanah announced it was acquiring PCMC from national oil producer Petroliam Nasional Bhd (Petronas) through PMV.
At that time, Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said the stake disposal would allow PCMC to embark on its next phase of growth. Following its acquisition of PCMC from Petronas, Khazanah had then entered into a term sheet for a collaboration agreement with IHH for shared services support and operational improvement initiatives at PCMC.
Khazanah had then also said IHH would be given the right of first offer to acquire PCMC during a pre-agreed period.
The IHH group operates hospitals as well as medical centres, clinics and ancillary healthcare businesses across Singapore, Malaysia, Turkey, China, India, Hong Kong, Macedonia and Brunei.