This article first appeared in The Edge Financial Daily on October 9, 2018

KUALA LUMPUR: IHH Healthcare Bhd has tightened control of Turkish healthcare group Acibadem Saglik Yatirimlari Holding AS after the latter’s shareholders converted their shares to equities in the Malaysia-based healthcare group.

IHH’s stake in Acibadem has been bumped up to 90% from 60% after the share conversion, according to the announcement with Bursa Malaysia yesterday.

Acibadem’s founder Mehmet Ali Aydinlar and his wife Hatice Seher Aydinlar converted a 15% stake in the group to 262.2 million IHH shares.

Khazanah Nasional Bhd’s wholly-owned unit, Bagan Lalang Ventures Sdn Bhd, also converted its 15% stake in Acibadem to 262.2 million IHH shares.

The options had been part of a 2011 agreement which saw IHH acquiring a 60% interest in Acibadem.

Under the agreement, the Aydinlars were given 10 years to exercise their options. The founder will continue to hold the remaining 10% stake in Acibadem.

Khazanah, which is IHH’s largest shareholder with a 40.33% stake currently, will see its stake increase to 40.91%.

Meanwhile, the Aydinlars’ stake in the group will almost double to 6.21% in total from 3.23%, IHH said.

Meanwhile, Employees Provident Fund’s stake has been diluted to 8.52% after the duo’s share conversion from 9.06% previously.

“The transaction simplifies the shareholding structure of Acibadem and allows IHH to further consolidate its control in the Turkish operations,” IHH said in a statement.

This would give IHH the operational flexibility to deleverage Acibadem’s balance sheet, it said.

“Post completion of the transaction, IHH will capitalise the existing subordinated loans of US$250 million (RM1.04 billion) equivalent which are currently supported by Acibadem’s shareholders and to potentially divest the group’s non-core assets as part of its plan to significantly reduce its foreign currency debt,” the group added.

The acquisition is expected to be completed in the fourth quarter of 2018, subject to regulatory approval including from Bank Negara Malaysia, IHH said.

Shares in IHH rose 20 sen, or 3.92%, to close at RM5.30 yesterday, with a market capitalisation of RM43.7 billion.

The group’s share price has fallen sharply since early August, following a lawsuit over its acquisition of Indian hospital group Fortis Healthcare Ltd and the depreciation of the Turkish lira. It has been down 92 sen or 15.28% since Aug 1.