Bulk of IHH’s IPO proceeds will go to repay borrowings

theSundaily KUALA LUMPUR (July 4, 2012): IHH Healthcare Bhd, Asia's largest healthcare provider, will use more than 90% of the RM5.13 billion proceeds raised from its dual listing exercise in Malaysia and Singapore to repay bank borrowings, said its managing director Dr Lim Cheok Peng.

A small portion will be used for its expansion drive which will see the group building 17 hospitals and increasing the number of beds to 8,200 by 2015. As at March 31, IHH operates 4,900 beds in 30 hospitals.

IHH's listing exercise involves 2.23 billion shares comprising a public issue of 1.8 billion shares and an offer for sale of 434.65 million shares. It is expected to make its debut on the stock exchanges of Malaysia and Singapore on July 25.

The healthcare group is expected to raise up to RM5.13 billion from the 1.8 billion public issue shares based on RM2.85 and S$1.18 apiece.

Of the proceeds, 90.9% or RM4.66 billion will be used to repay borrowings in 12 months, RM279 million for working capital and general corporate purposes within 24 months, and RM188 million for listing expenses.

Speaking at the launch of IHH's prospectus by Prime Minister Datuk Seri Najib Razak here yesterday, Lim said the company plans to reduce its gearing to two times from the current four. Its debts stand at some RM6 billion while its cash pile is over RM1 billion.

On the expansion plan, Lim said IHH has invested 75% or RM3 billion as at June 30, and the rest of the investments will come from the proceeds of its listing and also bank borrowings.

"We plan to continue to grow and are in the process of increasing bed capacity at the existing facilities and building new hospitals in home markets of Singapore, Malaysia and Turkey. We also have presence in China, India, Hong Kong, Vietnam and Brunei."