Parkway’s long history with Malaysia

YOU could call it a home-coming of sorts. Parkway Holdings Ltd, which will likely fall into the hands of Khazanah Nasional Bhd, was founded back in the 1970s by Malaysians.

Then, individuals from the Tan family of IGB Corp and the Ang family of Petaling Garden had bid for the privatisation of land by the Singapore government.

A key member of the founding team was Tony Tan Choon Keat. Tony had identified the plot of land and won the bid. He then roped in the Ang family and together they built Parkway Parade, Singapore’s first shopping complex.

From there, Parkway sought to get into the private hospital business. It was an idea mooted by Tony, then the managing director of Parkway and nephew of Datuk Tan Chin Nam of IGB, who was then chairman of Parkway.

This led to the group acquiring Singapore’s Gleneagles Hospital Pte Ltd in 1987, followed by the Penang Medical Centre, which it renamed Gleneagles Medical Centre, Penang. In 1995, Parkway bought the Mount Elizabeth and Parkway East hospitals and became the largest private healthcare provider in Southeast Asia.

The Tan family eventually sold most of their holdings in Parkway in 1997, which was believed to have been the result of certain Singapore-based shareholders raising concerns over the profitability and lackadaisical share price of Parkway.

Tony remained in the driving seat for a while after that. He was the founding managing director of Parkway until 2000 and then as its deputy chairman until his retirement in 2005.

It is understood that DBS Land had then become a major shareholder.

Another shareholder who had sold their Parkway shares to DBS Land was Pantai Holdings. Indeed, Parkway and Pantai have had a long history of co-owning each other.

Pantai’s involvement in Parkway started in 1995. Then Pantai was under the control of the Berjaya Group. In December 1995, Vincent Tan along with Indonesian businessman Johannes Kotjo announced plans to acquire a 20% stake in Parkway.

Later Datuk Mokhzani Mahathir gained control of Pantai and through a series of corporate exercises, had sold off Pantai’s stake in Parkway to DBS.

Mokhzani subsequently sold out of Pantai, to Datuk Lim Tong Yong.

Then in September 2005, Parkway under the stewardship of US private equity fund, Newbridge Capital, had acquired 30% of Pantai, said to be Lim’s stake in Pantai.

(Newbridge subsequently morphed into TPG Capital, which incidentally is the party that sold its stake to India’s Fortis Healthcare that started the whole sage for the tussle for control over Parkway.)

Going back to Parkway’s entry into Pantai, soon after that deal, a political storm brewed in Malaysia as it was alleged that since Pantai’s subsidiaries held key Malaysian government concessions, the group should not fall into the hands of foreigners, in accordance with the terms of the concessions.

The issue was resolved by a cleverly structured deal between Khazanah and Parkway which jointly formed a vehicle to hold the Pantai stake.

The vehicle in turn was majority held by Khazanah. Pantai’s hospitals though would continue to be run by Parkway through management contracts. However, if Parkway had gone into the hands of Fortis, there was the possibility of problems surfacing with Parkway’s management contract of Pantai. Pantai, in which Parkway owns 40%, contributes under a third of Parkway’s earnings before interest tax depreciation and amortisation. But with Khazanah firmly in control of Parkway, analysts say the relationship between Parkway and Pantai can only grow stronger now.

Parkway was in fact started by Malaysian individuals in the 1970s and even had Tan Sri Vincent Tan and Pantai Holdings as substantial shareholders in the 1990s.

Parkway had then started as a property development company with the Tan family of IGB Corp and the Ang family of Petaling Garden very much in the driving seat.