Share placement — Notable Mentions: Khazanah places out IHH shares

  • Pantai Hospital is operated by IHH, the world’s second largest healthcare operator
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This article first appeared in The Edge Malaysia Weekly, on December 19-25, 2016.


KHAZANAH Nasional Bhd cashed out on a relatively small portion of its stake in IHH Healthcare Bhd in June as part of a government push to boost liquidity on the local bourse.

On June 1, Khazanah placed out 130.3 million IHH shares, or 1.6% of the existing shares base. The price was not revealed, but at the day’s closing price of RM6.36 per share, the shares would be worth RM828.7 million.

The deal’s joint book runners were CIMB and Deutsche Bank. Khazanah retains 41.17% stake following the placement.

It seems a handsome return. For a perspective, that share price represents an increase of over 227% since IHH listed in July 2012 at an initial public offering (IPO) price of RM2.80 per share.

Apart from supporting the government’s wish for more liquidity in the market — Khazanah reportedly mulled paring stakes in Tenaga Nasional and Axiata as well — it also capitalised on IHH’s strong share price performance, which had been well north of the RM6 mark since October 2015.

Reports say as many as 80% of the shares were taken up by local institutional funds, with the rest going to foreigners.

Some 58.25% of IHH’s shares are held by Malaysian entities and 97% of the local shareholding is controlled by the government, including via sovereign wealth fund Khazanah.

The remaining shares are mostly held by Japanese investors (19.83% of the total shares base), according to Bloomberg data, followed by investors from the US (6.91%) and Singapore (6.30%).

The timing of the exercise would have helped whet the appetite for the shares. While reports say the divestment had been in the works since at least April, it was executed just days after IHH released stellar earnings for its first quarter ended March 31, 2016 (1QFY2016) on May 26.

For 1QFY2016, IHH’s quarterly revenue surged 23.5% year on year to RM2.48 billion while net profit jumped one third to RM235.5 million. It attributed the improvements to a cocktail of organic growth and three new hospitals kicking off operations.

The IPO of IHH, the world’s second largest listed healthcare operator by market value, raised US$2 billion through a dual listing on Bursa Malaysia and the Singapore Stock Exchange. It was the third-largest IPO in the world that year, behind the flotation of Facebook Inc and Felda Global Ventures Holdings Bhd.

This year, however, has seen IHH shares retreat roughly 2.4% up to the closing bell on Dec 14, shaving the counter’s one-year advance by half to 2.5%, thanks to a year-end rally in late-December 2015.

That said, the counter still outperformed the benchmark FBM KLCI, which had fallen by 2.91% year to date up to Dec 14. The index’s one-year return up to the same date stands at 3.98%.