IHH Healthcare Berhad listing: For it means for the man and woman in the street

PM Ah Jib Khor continues to mesmerize the public, with imminent and oh-so-secretive timing of GE, with another of his Economic Transformation Plan gizmo – listing of IHH Healthcare Berhad.


KUALA LUMPUR: The listing of IHH Healthcare Bhd (IHH) further affirmed the development and the maturing of Malaysia’s private healthcare sector and its emergence as a key player on the international stage, Prime Minister Najib Tun Razak said.
“I can safely say that this also offers further evidence of the vibrancy and depth of our capital markets, once again underlining the fact that Malaysia is a bright spot on the otherwise dark canvas of global finance,” he said at the launch of IHH’s initial public offering (IPO) prospectus here today.
He said the listing of IHH was an example of Khazanah Nasional Bhd’s commitment to delivering a clear and coherent regionalisation strategy, bringing together best-in-class business through a combination of mergers, acquisitions and collaborations.
“With this listing, IHH can further cement its role as a leading force in the global healthcare sector,” he said.
Wah, very nice big words Ah Jib Kor. But what do you mean-ah?

Do you mean we will get better doctors, better nurses, better equipment, less waiting time and more importantly, at affordable prices?
Healthcare is not about listing of shares, making profits, raising money. It is about helping the sick and the wounded to get well again, it is not about to hack off a hug chunk of a person’s money when he or she is down and weak, it is not about holding anxious and helpless families for ransom in their most difficult of time, and it is certainly not about denying people help when he or she cannot afford it while you have the means but not the will to help.
From a collection of press statement, I interpret, not as a financial expert from Lehman Brothers; but a guy who after paying all his bills and taxes, need to provide for his family and save enough for a rainy day, like falling sick and unable to work.

To understand IPO process, we must understand this basic concept.
Issue of new shares – the company will issue new shares, money from IPO goes into the company and be used for running the company

Offer for sale – the existing shareholders will sell their shares to the public hence they will make a (not taxable in Malaysia) profit and money does not go to the company.

In IHH’s case, issue of new shares amount to 1800million shares and existing shareholders (Khazanah) will sell their 434.65 million  shares but still keep enough share to own 47.78% of IHH.

Where would the IPO money go?

Khazanah could see RM5b gain from IHH IPO
By Lee Wei LianJuly 03, 2012KUALA LUMPUR, July 3 — Khazanah Nasional Berhad could see returns of nearly double its initial investment in IHH Healthcare Berhad when the hospital group is listed later this month, said the state asset manager today.

Also, another RM188million goes to listing expenses, benefitting lawyers, accountants, merchant bankers, the stock exchange….all except patients.
How come there are such big amounts owing to banks? Because a lot of hospitals were bought and borrowings from banks to finance such purchases. So Khazanah went on a buying spree of hospitals and at a chosen point of time, get investing community as well as man and woman in the street to help them rpeay the banks.
This way of building hospitals would be more expensive than just using tax payers’ money to build hospitals from scratch because money has to be paid for 1) previous owners’ selling price and 2) bank interest on the selling price.
And as a listed company, IHH would need to
1) pay for bank loans and interest it would surely incur
2) make enough profits to pay tax, dividend and reinvest 
3) advertising and promotion expenses<come to think of it, why should hospitals spend on advertising?>

All this would make IHH a very expensive cost centre. And it seems that its IPO price of RM2.85,is too high and if you tell investor that their earnings is expected to be better than average, there will be pressure for the hospital to make as much as possible from the customers (who should, first and foremost regarded as patients in need; not cash cow to milk)
CIMB CEO Datuk Seri Nazir Razak, whose bank is adviser to the deal, declined to comment at a press conference on the apparently high valuation of the hospital group’s shares, which at an indicative price of RM2.85 was reported to be 93 times 2011 earnings compared with 15.3 times on average for hospital operators in emerging Asia.

Why can't we instead of making huge profits, incuring interest from trading hospitals like chattel, just build hospitals from tax payers' money, give the healthcare workers the best equipment and great remuneration so that they can just focus on giving their best?

That would be real transformation - from woeful public hospitals and exceedingly expensive private hospitals, to just plain hospital who do what they are basically suppose to do, and do it well.

Or is it just a foundation to be laid for 1Care Malaysia to be implemented once BN obtain another 5 years mandate in the forthcoming generel election?


  1. http://www.malaysia-today.net/mtcolumns/from-around-the-blogs/50409-ihh-healthcare-berhad-listing-for-it-means-for-the-man-and-woman-in-the-street-

    written by syd, July 06, 2012 10:08:58

    Just like the north south expressway.
    Completed at about RM3 billion and now sold for RM20 billion. The state of the highway remains the same, i.e. no road widening to ease congestion. Money borrowed from banks to make the rich richer with no benefit for the users.
    written by JIG, July 05, 2012 15:43:18

    Health care is certainly a necessity to every one needing medical attention at affordable cost.
    Indeed, the IPO of IHH will place affordability beyond even the so-called upper middle class.
    As it is now, even though with a minimum starting salary for the current generation of young workers,
    spiraling home and transportation costs, and food prices already put a strain on the working public. We see many borrowers, from Ah Longs & legitimate lenders (bankers for instance) taking loans to repay bills from
    University Hospital, HUKM etc. incurred by disease-striken aging parents and loved ones, and then taking
    on additional jobs to repay these borrowings. Of course, these hospitals charge lower scales, but this would
    mean either a long waiting list, or overworked houseman surgeons for the many lucky enough to make it in time for the operations ward.
    The ruling political leaders must have thought that mass production of doctors will take care of the "money" part for the lower & middle-income earners, seeking medical aid, & IHH will be fine for the remaining populace. How wrong!
    The richer segment is seen to patronize private specialists, or even seeking overseas treatment "as money is the least concern to them. And not many are in this class. So, the situation has reached such a state that a doctor was heard to remark,
    "If you can't pay, you don't have the right to live!". How sad.

    Maybe it's hindsight, but in the good old days (and sigh, in the better-governed future?) life should be better
    if health care, utilities and transport have remained in the hands of the government. But what happens instead?

    IHH may just equate to Irreversible Health Hazard.
    God Save Malaysia!
    written by Bully No 1, July 05, 2012 15:24:58

    They made public hospitals as one way killer graveyards s that this listing for private healthcare succeeds...

    In Malaysia, social care is ghone...its all about me me me.....and with this alaysia is doomed as it is only a matter of time before a revolution takes place...
    written by sltemp, July 05, 2012 13:11:30

    The issue is that many Malaysians prefer (or rather, want) to seek treatment at private hospitals despite the high costs. The main reason for this is that most Malaysians think poorly of the medical standard of public hospitals. Patients overcrowding, unsympathetic care-givers, outdated medicine and treatment, insufficient medicine, broken-down equipment, etc, are but some of the problems. If the standard of public hospitals were to be good, fewer people would go to private hospitals. Nowadays, medical treatment is no longer about caring for people but a business for making lots of money.
    written by Batang Berjuntai, July 05, 2012 12:52:48

    Another Cash Out from the market.

    When the money goes to Khazanah, where is it ultimately heading to ?

    Whose pocket ? UMNOtahi, UMNOtahi chelup & UMNOtahi kichaps ?

    Any legalised THEFT like Felda Listing ???

    Rakyat, becareful, do not be caught holding the nasty baby, when the Thieves will be enjoying the Loot offshore.

  2. Very informative post. Thanks for taking the time to share your view with us. website