Mahkota draws IHH interest

Company said to be interested in buying Malacca hospital

A potential sale of Mahkota Medical Centre has attracted the interest of IHH Healthcare Bhd, sources say.

They say the sale of the hospital could be a good fit for IHH although it would also be subject to the final sale price that would be agreed upon.

“It is an interesting proposition from the sellers, but the price needs to be right as well valuation-wise so that it would be a strategic fit for the company,” they say.

“Prices that are being explored could be lower than the indicative US$250mil (RM912.5mil),” they add.

The Mahkota Medical Centre is a 266-bed hospital located in the heart of Malacca City on Jalan Merdeka and is said to be up for sale, according to Bloomberg.

The potential sellers include Singapore-listed healthcare services provider Health Management International Ltd which owns a 48.95% stake in the hospital but with a control over it.

Health Management is the biggest single shareholder in the 21-year old Mahkota Medical Centre and the hospital’s other two shareholders are also said to be planning to sell their stakes.

In a response to StarBizWeek on whether it was exploring the potential sale of the hospital, an IHH spokesperson said IHH was always looking at various value accretive opportunities to add to its portfolio.

“However, it is not appropriate for us to comment on specific transactions and we will update the market if there are any material developments,” the spokesperson says.

Meanwhile, a spokesperson for TMC Life Sciences Bhd says the company would not be interested in acquiring the Mahkota Medical Centre at this point in time.

“We are not aware of any plans for acquiring Mahkota Medical Centre. I think our plate is presently full at the moment,” the spokesperson says.

TMC, which is 69% owned by Singapore billionaire Peter Lim Eng Hock, had recently announced the RM400mil acquisition of the Thomson Medical Hub in Johor Baru.

Observers say TMC needs time to digest their recent acquisitions and expansion plans for its hospital at Kota Damansara before embarking on a new one and its decision not to pursue Mahkota Medical Centre is a wise one.

“Valuations for healthcare is high at the moment and could remain high as the industry is emerging to be an increasingly necessary part of the economy. More so, healthcare is important to maintain a healthy and functional population to support economic growth,” a healthcare analyst says.

For the Mahkota Medical Centre meanwhile, the said indicative asking price of US$250mil (RM912.5mil) values the hospital at RM3.43mil per bed.

That rate is well above recent historical valuations of comparative hospitals wherein TMC had acquired the Iskandariah Hospital at the Thompon Medical Hub for RM2.6mil per bed.

Time will tell if IHH would eventually acquire the Mahkota Medical Centre but the appetite for hospital assets seems to be as strong as ever and their present owners could be taking the opportunity to cash out at high valuations.

“While the Mahkota Medical Centre is an immediate cash generating asset, it would need to be seen if some of its assets have reached the end of their lifecycle given that the hospital has been operating for two decades. The purchasers would need to take this into account into their valuations,” an analyst says.

IHH already has a presence in Malacca through the 250-bed Pantai Hospital Ayer Keroh that is located some 10km away from the Mahkota Medical Centre.

Pantai Hospital Ayer Keroh was established in 1986 and is located away from the touristy area of Malacca where the Mahkota Medical Centre is situated.