IHH – The Push for Success

The growing healthcare sector in Southeast Asia received a big boost last year with the successful initial public offering (IPO) of IHH Healthcare Bhd. Raising RM6.67 billion, this was the world's third largest IPO of 2012 after Facebook and Felda Global Ventures Holdings. IHH's shares later jumped as much as 14 per cent on listing in KL and Singapore, with investors eager to participate in this Malaysian success story.
With more than 30 hospitals and clinics in Malaysia, Singapore, China and other Asian countries, IHH is already the continent's largest hospital operator. With a market capitalization of RM29.6 billion, it is now the world's second-biggest listed healthcare provider after HCA Holdings Inc. in the United States.
The listing was part of a larger plan by Prime Minister Datuk Seri Najib Razak to privatise government-linked companies that are not deemed strategic. This helps to unlock value for the nation and investors, and allows companies to expand using their IPO proceeds.
Even before the listing, IHH had planned to add 67 per cent more hospital beds by 2017 to capitalise on growing demand in Asia for better healthcare, given rising income levels and aging populations. This expansion has now been given a new impetus by the Barisan Nasional Government.
"We see opportunities in the region for the year ahead and will continue to build on our past year's performance and are looking for new opportunities in countries like Vietnam, Turkey and Abu Dhabi," IHH Chairman Abu Bakar Suleiman said recently.
IHH won the public tender in March for its first private hospital in Hong Kong with a RM2 billion deal with local billionaire Cheng Yu-Tung. The development of the 500-bed facility will be overseen by IHH's subsidiary GHK Hospital Ltd and will reach operational readiness by late 2016.
IHH beat two other bidders for the project to develop hospitals in two locations in Hong Kong as the territory looks to increase capacity. The company said the potential profit contribution from this joint venture would boost future earnings, which have seen a fourth-quarter profit rise of almost four times that of a year ago.
In fact, IHH has expanded rapidly in the past few years and currently employs 24,000 people in 30 hospitals as well as medical centres and clinics.
It has added Turkish hospital group Acibadem Saglik Yatirimlari Holding AS, Singapore's Parkway Holdings and India's Apollo Hospitals Enterprise Ltd to its local holdings Pantai Hospitals and IMU Health Sdn Bhd.
Apart from boosting healthcare capacity in the region, IHH is also providing value addition to Khazanah Nasional Bhd. As the healthcare arm of the state investor, IHH's impressive growth is benefitting Khazanah, with a record high portfolio in 2012 that jumped 12.3 per cent to RM121.6 billion after the IPO.
"IHH Healthcare Bhd, with its integrated health network and diversified geographical exposure is a winner in the long run," said Public Investment Bank Research in a recent analyst report.
This shows that in healthcare too, BN's pro-business policies have succeeded in creating a Malaysian global leader. In this demanding sector, a Malaysian brand is holding sway internationally from Turkey to Hong Kong. That is some achievement.
IHH's success will also benefit healthcare in our nation, bringing in global expertise and world-class facilities. This is a win-win situation for Malaysia.