Khaz­anah sells 16 per cent stake in IHH Health­care

Two com­pa­nies say Ja­pan’s Mit­sui & Co is pay­ing $2.01 bil­lion to raise its stake in IHH to 32.9 per cent

The Gulf Today - Business - - INTERNATIONAL -

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

In sep­a­rate state­ments, Khaz­anah and Mit­sui said the Ja­panese firm is pay­ing 8.42 bil­lion ring­git ($2.01 bil­lion) to raise its stake in IHH to 32.9 per cent and be­come the big­gest share­holder of one of Asia’s largest pri­vate hos­pi­tal groups. Khaz­anah’s stake will be cut to about 26 per cent.

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.

“This is the be­gin­ning of a ra­tio­nal­i­sa­tion ex­er­cise (for Khaz­anah),” said a se­nior banker at a Malaysian bank, de­clin­ing to be named be­cause he was not au­tho­rised to speak to the me­dia.

“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.

TRIM­MING STAKES

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

“De­mand for med­i­cal care is rapidly in­creas­ing with eco­nomic growth and age­ing whereas Asia con­tin­ues to face shortage of hos­pi­tal beds and doc­tors,” Mit­sui said.

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 largest listed health­care groups with a mar­ket value of $10 bil­lion.

It re­cently took con­trol of In­dia’s For­tis Health­care in a tightly con­tested takeover bat­tle, pay­ing more than $1 bil­lion to gain own­er­ship of over 30 hospi­tals.

Khaz­anah an­tic­i­pates the IHH stake sale will be com­pleted by the first quar­ter in 2019, sub­ject to rel­e­vant reg­u­la­tory ap­provals and IHH com­plet­ing a pre­vi­ously an­nounced ac­qui­si­tion of a 30 per cent ad­di­tional eq­uity stake in a Turkey­based health­care group Aciba­dem Saglik Yatir­im­lari Hold­ing.

Shares in IHH rose 8 per cent on Thurs­day, while Mit­sui shares were up 1.4 per cent.

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