- It was reported in the press that IHH Healthcare Bhd, through its wholly-owned subsidiary Parkway Hospital, has acquired a 74% stake in Global Hospitals Group for 1,800 crore Indian rupees (RM1.09bil).

- India-based daily The Economic Times quoted two sources as saying that IHH had acquired the shares from private equity investor Everstone Capital, Anand Rathi Capital Advisor Ptd Ltd, and other individual investors. The remaining 26% stake is held by Global Hospitals founder, Dr K Ravindranath.

- Global Hospitals Group, which is based in Hyderabad, is reportedly a chain that specialises in liver transplants. It is a pioneer in multi-organ transplants including liver, heart and lung.

- According to its website, it offers tertiary care with ~2,000 beds across hospitals in Hyderabad, Chennai, Bangalore, and Mumbai (see Exhibit 1).

- On an annual basis, it treats 3mil outpatients and 50,000 inpatients with 18,000 surgeries conducted.

- Clinical services offered include gastroenterology, hepatobiliary, cardiac sciences, neurosciences, orthopaedics, organ specific cancer care, urology, ENT and transfusion medicine, among others.

- According to The Economic Times, Global Hospitals has an operating profit of 130 crore rupees. A source told the daily that a press conference will be held soon when the deal is signed.

- We are not surprised with the news as acquisitions are part of IHH’s plans to grow its business. Recall that in March, it had acquired a 51% stake in Continental Hospitals for 300 crore rupees (RM166mil). Continental Hospitals operates a 750-bed hospital in Hyderabad.

- Apart from that, IHH already has an exposure in India via a 10.8% stake in Apollo Hospitals Enterprise Ltd to operate Apollo Gleneagles Hospital in Kolkata and Apollo Gleneagles PETCT Centre in Hyderabad. It also has a 50% stake to develop the Gleneagles Khubchandani Hospital in Mumbai with a 450-bed capacity. The hospital is slated for completion this year.

- We maintain our numbers pending further updates on the acquisition and the release of its 2QFY15 results, expected at the end of this month. Our HOLD call remains.

Source: AmeSecurities Research - 6 Aug 2015