* Listing to push Malaysia to top of Asia IPO league for 2012
* More than 20 cornerstone investors to take 62 percent of shares
* Listing to benefit the healthcare industry as a whole - analyst
* Demand could better Felda Global - fund management official
By Yantoultra Ngui
KUALA LUMPUR, July 3 (Reuters) - Malaysia’s prime minister will launch on Tuesday the $2 billion initial public offering of state-backed IHH Healthcare Bhd, Asia’s largest private hospital operator, solidifying the country’s status as Asia’s top IPO destination this year.
The sale of shares in IHH follows the $3 billion listing last week of palm oil firm Felda Global Ventures Holding , which was the world’s biggest IPO of the year after Facebook Inc.
Prime Minister Najib Razak will release the IPO prospectus at an event in the Malaysian capital, continuing his drive to monetise state-linked assets and boost the economic feel-good factor ahead of a general election due by next March.
IPOs in Malaysia, where the equity market is dominated by local investors and a large domestic pension fund system, have defied a trend in other financial markets such as Singapore, where motor racing firm Formula One decided to postpone its near $3 billion flotation due to volatile markets.
As a result, Kuala Lumpur has been running neck-and-neck with China’s Shenzhen as Asia’s top IPO destination.
Sovereign wealth fund the Kuwait Investment Authority, asset manager Blackrock and 20 other big “cornerstone” investors have committed to buy nearly two-thirds of the shares on offer.
“The only reason I can see why Malaysian IPOs have gone ahead is simply because there is a very large institutional investor base here that is cash-rich,” said Abdul Jalil Abdul Rasheed, chief executive officer of Aberdeen Islamic Asset Management Sdn in Kuala Lumpur.
“Malaysia is now the largest IPO market in Asia, and surely that is not sustainable. I think it’s just that Malaysia is probably having some time in the sun now that other markets are quite weak.”
IHH, the healthcare arm of Malaysia’s state investor Khazanah Nasional, is one of the few available plays on the healthcare sector in the region, where rising incomes are stimulating demand for better services.
With its dual listing in Singapore, IHH joins the likes of Kuala Lumpur-listed KPJ Healthcare Bhd, Singapore’s Raffles Medical Group, Bangkok Dusit Medical Services and India’s Fortis Healthcare.
“We believe the listing will benefit the industry as a whole,” Foo Chuan Loong, an analyst with Kuala Lumpur-based TA Securities told Reuters.
“This optimism may have a spillover effect on other healthcare players like KPJ Healthcare. In addition, there are also not many good healthcare stocks to look at.”
IHH, which counts Japan’s Mitsui & Co and Dubai-based Albraaj Capital as shareholders along with Khazanah, embarked on an aggressive overseas shopping spree in recent years.
It added Turkish hospital group Acibadem AS, Singapore’s Parkway Holdings and India’s Apollo Hospitals Enterprise Ltd to its local holdings Pantai Hospitals and International Medical University.
While IHH has made no mention of plans to use the IPO proceeds for other acquisitions, it said in its draft Singapore prospectus it would use 4.66 billion ringgit ($1.5 billion) to pay down debt, saving some 120 million ringgit ($37.8 million) in interest payments.
Total debt stood at around $2.4 billion as of the end of March.
A strong domestic market could see IHH make a stronger trading debut than Felda Global’s 20 percent first day pop when the firm lists on the Kuala Lumpur and Singaporean bourses on July 25, due in part to its defensive appeal, local investors say.
“IHH offers less to the public and institutional investors (10.52 percent) than Felda (26.9 percent), how difficult is it for it to perform the same as Felda?” said a senior official with a Malaysian bank-backed fund management firm.
Indigenous “Bumiputra” investors, majority ethnic Malays who benefit from a decades-old affirmative action policy, are bound to snap up IHH at an indicative price of 2.85 ringgit a share, which would value the company at around $7.3 billion.
The company will start taking orders for the IPO on July 4, with pricing slated for July 12, according to the prospectus.
The 22 cornerstone investors, who also include International Finance Corp, the private investment arm of the World Bank, will buy 1.39 billion of the 2.23 billion shares on offer - just over a quarter of the company - the biggest take-up by such investors of any recent major offering in the region.
Up to 1.8 billion new shares in the IPO are on offer, while Abraaj Capital will sell 434.7 million shares in the dual Kuala Lumpur and Singapore listing, the draft prospectus showed.
The group posted a profit of 394.117 million ringgit in 2011 versus 574.754 million in 2010 - a drop of 31 percent on higher staff costs.
CIMB, Deutsche Bank and Bank of America-Merrill Lynch are the lead global co-ordinators, with Credit Suisse, DBS, Goldman Sachs and Maybank acting as joint bookrunners in the IPO.