Fresh from winning the battle for Singapore’s healthcare group, Parkway Holdings Ltd, state-owned investment arm Khazanah Nasional Bhd is looking to raise around S$2.65 billion (RM6.19 billion) in bonds and bank loans to help finance its S$3.5 billion takeover of the largest private hospital operator in Asia.
Around S$800 million in sukuk will be arranged by OCBC Banking Corp Ltd, DBS Group Holdings and CIMB Group Holdings Bhd, according to sources familiar with the matter. The sukuk road show is scheduled to be undertaken in Singapore on Monday, with book building to start on Tuesday, the sources said.
A source said Khazanah would arrange another S$1.85 billion in syndicated loans involving a total of eight local and foreign banks, including United Overseas Bank Ltd, DBS Group Holdings Ltd, CIMB Group, HSBC Bank, Maybank, ANZ Banking Group, PNB Paribas and OCBC Banking Corp Ltd.
Khazanah won the bid for Parkway after revising its offer to S$3.95 cash a share on Monday for the 76.1% it does not already own, some 3.9% more than the S$3.80-a-share bid by rival and New Delhi-based healthcare group, Fortis Healthcare Ltd. Deutsche Bank and CIMB are the advisers to Khazanah.
According to Namura Securities Ltd, Khazanah’s latest offer values Parkway at 39 times FY09 price-to- earnings ratio (PER) and 28 times for prospective FY10 earning, compared to its peers with an average of 22 times for FY09 and 18 times for prospective FY10.
Fortis and Khazanah each currently holds about 25% of the biggest listed private healthcare group in Asia. Fortis has said it would accept the buyout offer and the deal would give Khazanah full ownership of 16 additional hospitals in eight Asian countries.
Fortis, controlled by billionaire brothers Shivinder and Malvinder Singh, is expected to make a gain of about S$116.7 million. The brothers brought 24% of Parkway in March for S$3.56 per share from US-based buyout firm TGP, and subsequently increased its stake to 25% via the open market.
Other major shareholders of Parkway include Bank of New York Mellon Corp with 5.98%, Newton Investment Management Ltd and Franklin Resources Inc with 5.98% each.
Parkway would be held under Khazanah’s healthcare unit, Integrated Healthcare Holdings Ltd, which also has stakes in India’s Apollo Hospitals Enterprise Ltd, Pantai Holdings Bhd and IMU Health Sdn Bhd in Malaysia. Parkway has more than 3,400 hospital beds in China, India and Malaysia among other Asian countries. In Singapore, the group’s operations include the high-end Gleneagles and Mount Elizabeth hospitals, both located close to the central business and shopping district.
It also manages a real estate investment trust and provides health-care education. One of its prized assets is the S$1.5 billion Parkway Novena Hospital which is currently being built in Irrawaddy Road in Singapore, not far from upmarket Orchard Road. It is slated to commence operations either next year or in early 2012.
Parkway’s shares ended unchanged at S$3.92 apiece yesterday with 22.4 million shares traded. It has gained 34.6% year-to-date.
This article appeared in The Edge Financial Daily, July 29, 2010.
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