CEO Morning Brief

IHH Healthcare on the Lookout for M&A Deals, Says Group COO

Publish date: Wed, 31 May 2023, 08:37 AM
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TheEdge CEO Morning Brief
IHH Healthcare group chief operating officer Joe Sim Heng Joo (Photo by Shahrin Yahya/The Edge)

KUALA LUMPUR (May 30): IHH Healthcare Bhd is exploring more potential partnerships or mergers and acquisitions (M&As) to strengthen its business, especially in its three core markets of Malaysia, Türkiye and India, according to group chief operating officer Joe Sim Heng Joo.

"We see that there are certain acquisitions where we can add value, a so-called parenting advantage, which adds value to the underlying business. We believe that in many cases, the core of our growth is through M&As, which allows us to improve our margins.

"But how [the M&As] will materialise, I think, depends very much on the price and the conditions," Sim told The Edge after the group's annual general meeting on Tuesday (May 30).

Sim took over the duties of group managing director and chief executive officer in February, following Kelvin Loh’s resignation after three years at the helm.

On the RM5.67 billion purchase of Ramsay Sime Darby Healthcare (RSDH), which fell through after six months of negotiations, Sim said there was no binding agreement that could be reached between the group, Ramsay Health Care Ltd and Sime Darby Bhd.

RSDH, which was established in 2013, is a 50:50 joint venture between Ramsay Health Care and Sime Darby.

“We have not come to an agreement on the terms and all that. We want to make sure that we get the best return on equity. So there are certain things that the seller and buyer have to agree on [but the deal has not gone through],” said Sim.

Asked if the group is still keen on acquiring RSDH, Sim said: “I cannot say much about this, but I would say that we are constantly on the lookout for acquisitions, I think the asset [RSDH] is good, the condition and price still need to be discussed."

On March 28, Reuters reported, citing sources, that there is a plan to revive the sale of RSDH, which could value the business at around RM6 billion. At the time, it said Ramsay Health Care and Sime Darby were in discussions with financial advisers to explore a sale of RSDH to strategic investors. A day after the news broke, Sime Darby clarified that no decision had yet been made on the sale of its healthcare division.

It was reported that RSDH was to be listed on Bursa Malaysia’s Main Market at a value of US$300 million (RM1.38 billion ), but the planned initial public offering had been put on hold as Sime Darby explored various options to expand its healthcare business.

Sime Darby’s latest annual report showed that RSDH posted a revenue of RM1.15 billion in the financial year ended Dec 31, 2022 (FY2022), up 9% year-on-year (y-o-y) underpinned by recovery in patient census in both Malaysia and Indonesia, surging acuity case mix as well as the delivery of Covid-19 related services.

Consequently, earnings before interest, taxes, depreciation and amortisation grew 18% y-o-y to RM266 million.

RSDH’s focused portfolio consists of 1,530 licensed beds across seven premium hospitals in Malaysia and Indonesia.

At Tuesday’s noon break, IHH Healthcare’s share price was up seven sen or 1.22% at RM5.81, giving it a market capitalisation of RM51.17 billion. Sime Darby, meanwhile, slipped two sen or 0.98% to RM2.03, valuing it at RM13.84 billion.

Read also:
Sime Darby: No decision to divest Ramsay Sime Darby Health Care
Ramsay, Sime Darby plan to revive sale of Asia healthcare venture — sources
Sime Darby says all options on the table, including IPO, on healthcare unit after IHH deal aborted
IHH Healthcare submits proposal to buy Ramsay Sime Darby for RM5.67b

Source: TheEdge - 31 May 2023

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