IHH reportedly buys stake in India's Global Hospitals

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KUALA LUMPUR (Aug 5): IHH Healthcare Bhd, through its wholly-owned subsidiary Parkway Holdings, has acquired a 74% stake in Hyderabad-based Global Hospitals Group for an equity value of Rs 1,800 crore (RM1.09 billion), Indian news agency The Economic Times reported today.

The report, quoting two sources with direct knowledge of the development, said IHH Healthcare has bought Global Hospitals’ shareholdings of private equity investor Everstone Capital, Anand Rathi Capital Advisor Pvt Ltd and some individual investors in the unlisted chain specialising in liver transplants.

The remaining 26% will continue to be owned by Global Hospitals’ founder Dr K Ravindranath, the sources said.

The report stated that the Global Hospitals chain has a debt of Rs 350 crore (RM210 million).

"The IHH Healthcare Bhd Group has purchased around 74% stake for Rs 2,150 crore, which includes Rs 350-crore debt," the report states, quoting a source involved in the deal.

The source told The Economic Times that the deal was signed last week, but Dr Ravindranath denied this when contacted by the news agency.

"I will call a press conference when the deal is signed," he was quoted saying when contacted over the phone.

The report stated that Global Hospitals is one of the largest healthcare providers in India with presence in cities such as Mumbai, Bengaluru, Chennai and Hyderabad, with an operating profit of Rs 130 crore (RM80 million).

IHH Healthcare has gained a larger share in the Indian healthcare pie with the acquisition of Global Hospitals.

It was reported in March this year that IHH Healthcare had acquired a 51% stake in Hyderabad-based Continental Hospitals for Rs 300 crore (RM180 million).

IHH Healthcare (fundamental: 1.65; valuation: 0.5) reportedly also owns a 10.5% stake in India’s Apollo Hospitals, and is involved in two joint ventures with Apollo in Kolkata and Hyderabad.

IHH Healthcare is reportedly the world’s second largest healthcare service provider by market value and it owns Singapore's Parkway Group, Pantai Holdings Bhd and Gleneagles hospitals, with a presence spanning from China to Turkey.

Malaysia’s sovereign wealth fund Khazanah Nasional is the majority shareholder of IHH Healthcare.

Year to date (YTD), IHH Healthcare shares have risen 27.08%, bucking the trend of the FBM KLCI which has a registered YTD decline of 1.67%. IHH Healthcare’s price to earnings ratio (PER) is currently 64.86 times.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)