Reuters: Global Markets: Investors chase IHH up 10 percent in debut of world's No.3 IPO

Reuters: Global Markets Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

Investors chase IHH up 10 percent in debut of world's No.3 IPO Jul 25th 2012, 02:05 By Yantoultra Ngui and Charmian Kok KUALA LUMPUR/SINGAPORE | Tue Jul 24, 2012 10:05pm EDT KUALA LUMPUR/SINGAPORE (Reuters) - Asia's largest hospital operator IHH Healthcare Bhd (IHHH.KL) jumped nearly 10 percent at its trading debut on Wednesday, as investors eager for exposure to the region's growing healthcare sector chased the world's third largest listing this year. IHH raised $2.1 billion in a share sale that confirmed Malaysia's status as Asia's current IPO capital following the strong debut last month of plantation giant Felda Global Ventures Holdings (FGVH.KL), the world's biggest IPO of 2012 after Facebook (FB.O). The stock rose 9.6 percent from an IPO price of 2.80 ringgit when trading started on the Malaysian stock exchange, within the expectations of analysts who had predicted a bounce despite the backdrop of tottering global equity markets and pulled listings. It's Singapore debut (IHHH.SI) also saw a 9.6 percent jump, adding some shine to the regional bourse after India's Reliance Communications (RLCM.NS) shelved a planned $1 billion IPO by its undersea cable unit on jittery market conditions. "We are quite happy with the start of our stock trading even though it is just under 10 percent premium. It shows a vote of confidence from investors towards us," IHH Managing Director Lim Cheok Peng told reporters in the Malaysian capital. Malaysia, where the government has a heavy hand in the economy and the equity market is dominated by local investors and large domestic pension funds, has defied a gloomy trend that has seen several IPOs pulled due to a lack of investor interest. IHH is the healthcare arm of Malaysia's state investor Khazanah Nasional KHAZA.UL. It joins the likes of Kuala Lumpur-listed KPJ Healthcare Bhd (KPJH.KL), Singapore's Raffles Medical Group (RAFG.SI), Bangkok Dusit Medical Services BGH.BK and India's Fortis Healthcare (FOHE.NS) as key healthcare stocks. The stock is set to lead investor exposure into a region where rising incomes and a growing middle class in China, India and Southeast Asia are boosting demand for better medical services. "Given IHH's size, I won't be surprised to see them incorporated as a component of the STI (Straits Times Index), so some funds may be taking positions first," said Ng Kian Teck, lead analyst at Singapore-based SIAS Research. "There are not many healthcare plays here, especially of IHH's size but valuations are not cheap." NOT CHEAP IHH's IPO consists of 2.23 billion shares with an over-allotment option of up to 170 million shares, putting the total offering at $2.1 billion. The institutional component of the offer was oversubscribed by more than 100 times. Despite strong demand, the IPO was priced slightly below the top of a 2.67-2.85 ringgit range to "leave something on the table", one source involved in the deal said. Nearly two-thirds of the shares were taken by big "cornerstone" investors including sovereign wealth fund Kuwait Investment Authority and International Finance Corp IFK.UL, the private investment arm of the World Bank. At 2.80 ringgit a share, IHH would have a market capitalization of 22.5 billion ringgit ($7.2 billion), making it the world's second-biggest listed healthcare provider after U.S. hospital operator HCA Holdings Inc (HCA.N). Bank of America-Merrill Lynch (BAC.N), CIMB (CIMB.KL) and Deutsche Bank (DBKGn.DE) are the lead global coordinators for the listing, with Credit Suisse (MLPN.P), DBS (DBSM.SI), Goldman Sachs (GS.N) and Maybank (MBBM.KL) acting as joint bookrunners. IHH, which counts Japan's Mitsui & Co (8031.T) and Dubai-based Albraaj Capital as shareholders along with Khazanah, has expanded rapidly over the past few years and now employs 24,000 people in 30 hospitals as well as medical centers and clinics. It added Turkish hospital group Acibadem AS (ACIBD.IS), Singapore's Parkway Holdings and India's Apollo Hospitals Enterprise Ltd (APLH.NS) to its local holdings Pantai Hospitals and International Medical University. Analysts' views are mixed on IHH's earnings growth outlook, with some saying it could struggle to achieve synergies from its large, complex operations extending from Malaysia and Singapore to Turkey. In contrast, TA Research said IHH's strong earnings growth outlook and favorable geographic diversification warrants the IPO price that values it at a 20 percent premium to its peers. At 2.80 ringgit a share, IHH trades at a historical price-to-earnings ratio (PER) of nearly 60 times, and 46 times forward PER based on Public Investment Bank's estimate of earnings per share of 6.1 sen for 2013. (Additional reporting by Niluksi Koswanage; Editing by Alex Richardson) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions