Parkway buys major stake in Pantai

Business Times: SOUTH-EAST ASIA’S largest healthcare provider, Singapore’s Parkway Holdings Ltd, bought almost a third of Pantai Holdings Bhd, a deal that may kick-start a consolidation of private hospitals in Malaysia.
The deal, worth some RM312 million, follows a string of cross-border investments between Malaysia and Singapore that has underscored the regional ambitions of companies from the two countries.
An analyst from Nomura Advisory Services said the entry of Parkway, an established healthcare provider with a proven track record, would substantially boost Pantai’s performance.
Although the purchase would not trigger a mandatory bid by Parkway to buy the rest of Pantai’s shares, analysts were convinced that the Singapore firm could extract a return on its investment.
“Most important (about the purchase) is that Parkway is very experienced in the healthcare industry and the whole consolidation exercise will help the industry,” said JP Morgan’s research head Melvyn Boey.
The entry of Parkway, the owner of the the Gleneagles group of hospitals, could alert other private hospitals that there is a ready buyer in town.
“There are not many players within Malaysia. Given Parkway’s entry, it should facilitate those who want to sell,” the Nomura analyst said.
Parkway bought 89.7 million shares from Pantai’s chief executive officer Datuk Lim Tong Yong for RM2.45 each, a 50 per cent premium to Pantai’s closing price on Monday, it said in a statement.
Another 35 million shares were bought in the open market for RM1.70 apiece.
Parkway also purchased 24.3 million warrants from Datuk Lim for RM1.33 each, which bring the total to RM311.6 million.
Last month, Pantai posted a record annual net profit of RM43.6 million for the year to June 30 2005 and investors pushed its share price to its highest in more than a year.
It is unclear if Parkway needs the Government’s approval for the purchase.
Pantai yesterday named two new directors, Parkway’s managing director Dr Lim Cheok Peng and Ashish Jaiprakash Shastry, who is from US private equity fund Newbridge Capital.
Newbridge Capital holds 26 per cent of Parkway.
Most of Pantai’s income is from its two government concessions, namely FOMEMA Sdn Bhd for health screening of foreign workers, and Pantai Medivest Sdn Bhd, for support services like laundry and disposal services to government hospitals in southern Peninsular Malaysia.