IHH’s stake sale a positive move
Proceeds will be channelled towards working capital needs
PETALING JAYA: IHH Healthcare Bhd is expected to see better investment rationalisation with the partial stake sale in India-based Apollo Hospitals Enterprise Ltd.
PublicInvest Research said it viewed the disposal positively – seeing it as an opportunity that would be channelled towards IHH’s working capital needs.
“We understand that it’s also a part of IHH’s effort in shaping and solidifying its India segment, which currently consists of the remaining 4.78% stake in Apollo, Apollo Gleneagles joint venture, Global Hospitals chain and a standalone Continental Hospitals.
“We are not surprised with the piece of news, as we do expect some adjustments in IHH’s India portfolio after its acquisition of Global Hospitals and Continental Hospitals in 2015,” the research house said in a report.
PublicInvest Research pointed out that IHH is known for taking charge of its hospitals and its preference for management control and consistency.
“On top of that, we believe these two hospital groups match IHH’s expertise in multi-specialty tertiary care more fittingly.
“Nonetheless, IHH still has plenty to work on for these hospitals at this point, from ramping up beds to improving occupancy rates, which will keep IHH busy on its focus in developing India as its fourth home market.”
Meanwhile, AmInvestment Bank in a report said Apollo Hospitals stake sale is part of IHH’s plan to consolidate and rationalise its investment in India to its two recently acquired hospitals – Continental Hospitals and Global Hospitals.
“In our opinion, by disposing of its stake in Apollo, IHH would be able to redeploy the proceeds to expand operations of its two hospital business for a bigger play in India’s burgeoning private healthcare demand driven by an overburdened public healthcare system.
“It is uncertain at this juncture if the stake sale is the first of more to come for its remaining stake in Apollo.”
In March 2015, IHH acquired a 51% stake in Hyderabad-based Continental Hospital, which operates a fully-equipped and multi-specialty tertiary and quaternary hospital.
This was followed by the acquisition of a 72.4% stake in Global Hospitals, which has a chain of eight hospitals with about 2,000 licensed beds in Hyderabad, Mumbai, Bangalore and Chennai.