Friday 29 Mar 2024
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KUALA LUMPUR (July 18): IHH Healthcare Bhd's wholly-owned Singapore unit Parkway Pantai Ltd is on the prowl in India for large hospitals in which it can take a controlling stake, according to Parkway Pantai chief executive operator for Indian operations, Ramesh Krishnan.

IHH recently made headlines after it was reported to be interested in buying Fortis Healthcare. Though it told Bursa Malaysia last month that it was not close to concluding any deal yet, it did acknowledge that it was evaluating opportunities in India, among others.

On Monday, the Hindu Business Line reported, quoting Ramesh, that hospitals in India now are ripe for the picking, as he scouted the healthcare landscape there for suitable assets to buy.

"There is a readiness for consolidation, there are hospital promoters willing to let go and there are good assets available but it depends on what you are looking for," Ramesh was quoted as saying in Mumbai by the Indian publication.

While the search was for large hospitals in big cities, the key factor is for IHH to get a controlling 51% stake in the target entity, he said.

Hyderabad, he highlighted, was one market "poised" for consolidation, with four to five assets in "trouble" at any one point. The same could be seen in other cities, he said, though no other names were cited.

IHH is already in Hyderabad. It acquired a 51% stake in Hyderabad-based Continental Hospitals Private Ltd for Rs310 crore in March 2015. In August that same year, it bought a 73.4% stake in Global Hospitals (Ravindranath GE Medical Associates Private Ltd) for Rs1,284 crore, which had some 1,100 operational beds in Hyderabad, Bengaluru, Chennai and Mumbai when IHH came into the picture.

But it has been about two years since those acquisitions and the healthcare group's appetite is far from satiated, Ramesh said.

IHH's strategy will continue to be skewed towards inorganic growth, he said, as greenfield projects come with the challenge of having to get approvals, setting them up, and so forth.

Asked if healthcare mirror pharmaceuticals, where promoters expect high valuations for their assets, Ramesh said: "If you compare it with other markets and purely base that judgment on valuation on multiples alone, you will find Indian multiples to be high."

But this was just one of the parameters of doing a valuation, he noted.

To IHH or Parkway Pantai, entities are evaluated by the niche clinical work they do, not the infrastructure or bed numbers they have. "With Global Hospitals, the unique feature was its liver transplants expertise and Parkway expects to grow this into a multi-organ transplant service," he said.

He also admitted that promoter-run hospitals sometimes have corporate governance issues, but that IHH would ensure that such concerns were first "cleaned up" before they put money in.

At 2.58pm, IHH shares were trading unchanged at RM5.92, giving the group a market capitalisation of RM48.86 billion.

 

 

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