PETALING JAYA: Healthcare provider Qualitas Healthcare Corp Bhd, which is en route to a listing on the Main Market of Bursa Malaysia, is close to securing a handful of cornerstone investors at an issue price of around 80 sen a share, valuing it at about 28.9 times its financial year 2015 (FY15) earnings.
Sources said among the cornerstone investors were Permodalan Nasional Bhd (PNB), RHB Asset Management Sdn Bhd, Etiqa Insurance & Takaful, Great Eastern Life and Eastspring Investments.
The planned initial-public-offering (IPO) price of 80 sen values the company at a whopping 42 times its FY14 earnings and would demand a market capitalisation of RM795.5mil upon listing.
It was understood that investors are willing to pay at high valuation for Qualitas shares based on an enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/EBITDA) of about 7.8 times for FY15 and 7 times for FY16. Such valuations is relatively low compared to its peers, namely IHH and KPJ that have EV/EBITDA valuations of 18.6 times and 13.3 times respectively.
Bankers noted that there was a strong interest for healthcare counters in the region, which could be seen from the recent listings.
“There is strong interest among investors for healthcare sector in the region as they are all expanding quite fast. For example the recent listings of ISEC Ltd in Singapore and Rumah Sakit Mitra Keluarga Group in Indonesia,” a banker said.
Mitra Keluarga just raised about US$343mil from its IPO and it planned to open seven new hospitals from its current 11 hospitals in operations.
Meanwhile, Qualitas is seeking to raise about US$150mil (RM553mil) from its IPO exercise, which is expected to float mid-this year.
Almost all of the company’s listing proceed would be used to expand its presence in the region through M&A and it also looking to expand into ambulatory care services.
The group’s plans in Malaysia include building comprehensive primary healthcare facilities and ambulatory-care centres, which carry out same-day procedures that do not require hospital admissions.
For the Australia market, it aims to grow its diagnostics business and introduce supplemental services such as allied health services to its primary-care business.
“There are lack of new primary issuances on Bursa Malaysia year-to-date and that it is common for healthcare provider to demand high valuations as investors are bullish on the sector for its stability to provide recurring income regardless market conditions,” said an analyst.
Credit Suisse Group AG and CIMB Group Holdings Bhd are the bankers working on the Qualitas IPO.
Qualitas, founded and helmed by managing director Datuk Dr Noorul Ameen, owns and operates primary healthcare centres across Malaysia, Australia, Singapore and India. These are generally outpatient services provided at general practitioners’ (GP) clinics. According to Qualitas’ draft prospectus, the group owns and operates 94 GP clinics under the Qualitas brand and a further 133 affiliate GP clinics in Malaysia, commanding a market share of 27.6% in 2013, based on Frost & Sullivan’s research.