IHH Healthcare, Asia’s largest healthcare company, has finally agreed to acquire Prince Court Medical Centre for M$1.02bn (US$240m).
The acquisition will be funded via a combination of internally generated funds and bank borrowings.
“We are pleased to be adding Prince Court Medical Centre to our existing network of 15 hospitals across Malaysia,” said chief executive designate Kelvin Loh. “This is a rare opportunity to acquire an attractive and accretive asset in Kuala Lumpur’s “Golden Triangle” that will strengthen IHH’s position in Malaysia while allowing us to capture the growing medical tourism market.”
In March last year, IHH signed an agreement with Malaysian sovereign wealth fund Khazanah Nasional to look after the day-to-day running of the medical centre.
This follows its acquisition by Khazanah from Malaysian oil and gas company Petronas for what was rumoured to be M$1.4bn. At the time IHH said that it would be given a right of first refusal to acquire the medical centre during a pre-agreed period.
“Given the recent change in Khazanah’s refreshed mandate, the decision was made to sell Prince Court to IHH, Khazanah’s healthcare platform,” Khazanah managing director Shahril Ridza Ridzuan said in a statement.
Located in Kuala Lumpur, Prince Court Medical Centre owns and operates a 277-licensed bed private healthcare facility offering a wide range of medical, surgical and hospital services including, among others, burns management, cancer, gastrointestinal diseases, interventional cardiology, in vitro fertilisation, nephrology, occupational health, orthopaedic and rehabilitation medicine.
The centre has struggled with profitability in the past. Accumulated losses until last year were M$1.42bn, but it has turned around. Prince Court Medical Centre posted profits of M$51m for 2018.
The reaction from analysts has been positive. Nafisah Azmi, analyst at AmInvestment Bank in Kuala Lumpur points out that Prince Court Medical Centre has an EBITDA margin of 16.9% which is lower than IHH’s EBITDA margins of between 21% and 25%. But the team from PublicInvest Research notes that: “Given Prince Court Medical Centre’s prime location, it should help IHH to gain a larger market share in medical tourism.”
The deal is expected to complete in the first quarter of next year.