Mitsui pays $2bn for 16% stake in IHH

KUALA LUMPUR/SINGAPORE: Malaysian sovereign wealth fund Khazanah Nasional Bhd is selling a 16% stake in IHH Healthcare Bhd to Japan’s Mitsui & Co Ltd for about $2 billion in cash, kicking off a restructuring of its portfolio under a new government.

In separate statements yesterday, Khazanah and Mitsui said the Japanese trading house would pay 8.42 billion ringgit ($2.01 billion) to raise its stake in IHHto 32.9% and become the biggest shareholder of one of Asia’s largest private hospital groups. Khazanah’s stake will be cut to about 26%.

Citing sources, Reuters had reported in August that Khazanah will likely cut stakes in some top-linked firms as the new government of Prime Minister Mahathir Mohamad overhauls the fund’s investment strategy, and that it could also review its stake in IHH Healthcare.

A senior banker at a Malaysian bank which has done deals with Khazanah and other state-linked companies said this marked the beginning of a rationalisation exercise for the fund.

“Probably they will maintain some of the more strategic investments, like some of the utility holdings. Some of the non-core ones and what they think they can rationalise, they will rationalise,” the banker said, declining to be named because he was not authorised to speak to the media.

Bankers expect the $37.5 billion fund to trim stakes in lender CIMB Group Holdings Bhd and regional telecoms firm Axiata Group Bhd, and also restructure struggling Telekom Malaysia Bhd in the coming months.

“The divestment is part of Khazanah’s strategy to grow the businesses that we are invested in and to find the appropriate times and value to create liquidity for our future capital and investment needs,” Khazanah managing-director Shahril Ridza Ridzuan said in the statement.

Facing a shrinking domestic population, Japanese trading house Mitsui has been expanding in Asia’s growing healthcare market. It first bought a stake in IHH in 2011.

IHH has transformed into a leading player in Malaysia, Singapore, Turkey and India, and in its key growth markets of China and Hong Kong, becoming one of the world’s largest listed health-care groups with a market value of $10 billion.

It recently took control of India’s Fortis Healthcare Ltd in a tightly contested takeover battle.