By Shannon Teoh
KUALA LUMPUR - Shares in Malaysia's IHH Healthcare jumped by over 10 per cent on Wednesday as Asia's biggest hospital operator made its stock market debut in the world's third-largest IPO this year.
IHH shares closed at 3.09 ringgit ($0.97) in Kuala Lumpur, 10.4 per cent above the 2.80 ringgit offer price for the float, which has raised $2.0 billion. The stock had opened at 3.07 ringgit.
The company is being dual-listed in Malaysia and Singapore. IHH's Singapore-listed shares ended at around its opening price of 1.22 Singapore dollars ($0.96), also about 10 per cent up from the offer price.
Analysts had forecast a strong debut thanks to expectations for growth in demand for quality medical services from Asia's expanding middle class. Fast-growing IHH employs 24,000 people in 30 hospitals and clinics in Malaysia, Singapore, Turkey, China and other Asian markets.
"The outlook for them is very positive. We have a growing awareness of healthcare needs in Asia so the demand is there and is increasing," said Ooi Chin Hock, a dealer with Malaysia's M & A Securities.
"It is the right industry to be in now. There is a lot of growth potential." The offering is the world's third-largest this year after social networking giant Facebook and Malaysian plantations operator Felda Global Ventures.
Facebook raised $16 billion from its IPO (initial public offering) in May but its shares plummeted afterwards. Felda raised $3 billion last month and its stock soared on its debut.
Felda and IHH went ahead with listing despite the volatile world economic environment, which has delayed other major public offerings in Asia, including a planned $2.5 billion Formula One listing in Singapore.
And IHH's shares on Wednesday bucked the gloom on world markets linked to the eurozone's woes.
IHH expects double-digit growth over the next five years, particularly in China and possibly eastern Europe, the company's managing director Lim Cheok Peng told reporters at the Kuala Lumpur stock exchange.
Besides the 4,800 hospital beds now in its portfolio, the company says another 3,300 are in the pipeline either through new developments or expansion projects.
"We are just starting our journey. I'm sure in time to come we are going to create more value for our shareholders," Lim said. Like Felda, the IHH listing is part of a plan to divest Malaysian government-linked companies.
IHH, which is majority-owned by Malaysian sovereign wealth fund Khazanah Nasional, has reserved 62 per cent of its offering for 22 so-called cornerstone investors.
The Felda and IHH listings have helped make Kuala Lumpur's exchange a bright spot this year in an otherwise gloomy world IPO scene.
Global accountancy firm Ernst and Young has said the exchange, Bursa Malaysia, was the third-biggest in terms of funds raised in IPOs in the second quarter of 2012, after NASDAQ and the New York Stock Exchange.
Analysts credit the divestment push and government efforts to encourage IPOs and boost the economy as elections approach, but say the Malaysian exchange is unlikely to supplant Asian IPO capitals like Hong Kong and Singapore.
But following IHH's successful debut, Bursa Malaysia chief Tajuddin Atan said the bourse could "definitely" expect more IPOs as the exchange bids to remain Asia's top IPO market for the year.
"Make no mistake, under the current environment, would you be able to find a premium (elsewhere)?" he said.