This article first appeared in The Edge Financial Daily on June 19, 2017 - June 25, 2017

KUALA LUMPUR: IHH Healthcare Bhd’s managing director Dr Tan See Leng referred to India as “IHH’s fourth growth market”. It is believed that the healthcare group is looking closer at strengthening its operations in the continent.

IHH and Fortis Healthcare Ltd are said to be in the advanced stage of negotiations and due diligence, according to news reports in India. The reports noted that IHH is likely to buy a majority controlling stake in Fortis.

When asked about the slew of reports emerging from India about IHH’s intention to purchase a major stake in Fortis, the healthcare group’s spokesperson said: “IHH is always looking at various value accretive opportunities. However, it is not appropriate for us to comment on specific transactions and we will update the market if there are any material developments.”

In India, the healthcare provider currently has the Ravindranath GE Medical Associates Private Ltd (Global Hospitals) and Continental Hospitals Private Ltd under its portfolio, spreading across five locations.

Not too long ago, the company sold its entire 10.85% stake in India’s largest healthcare provider, Apollo Hospitals Enterprise Ltd, for some RM1.2 billion, marking a RM559 million gain from its cost of investment of RM692.79 million.

Fortis operates only about 4,000 beds currently, although it has plans to increase the number by 7% to 10% each year. This number pales in comparison to Apollo which has over 10,000 beds currently.

It would seem that IHH’s major shareholder, Khazanah Nasional Bhd, would have come in full circle should the deal with Fortis materialise. Khazanah owns 41.12% equity interest in IHH.

In 2010, Khazanah and Fortis were in a tussle to take over Singapore’s Parkway Hospitals. After two long months of wrangling, Khazanah emerged as the winner of the deal after it offered S$3.95 per Parkway share it did not own — which was about a 76% stake then — bringing the total amount to S$3.3 billion.

Fortis, which then owned 24% of Parkway, had offered to take over the healthcare provider at S$3.80 per share but it bowed out of the race and walked away with S$116.7 million. Fortis is controlled by two brothers — Malvinder and Shivinder Singh.

For the first quarter ended March 31, 2017, IHH recorded a revenue of RM2.68 billion, up 8.1% from a year ago. Net profit doubled to RM470.05 million from RM235.48 million previously. As at March 31, net gearing stood at 20%.

Besides India, IHH has its presence in nine other countries, with home markets being Turkey, India, Malaysia and Singapore while China, Hong Kong, Macedonia and Bulgaria are seen as key markets. It is also operating in Iraq, the United Arab Emirates and Brunei. In total, it has over 10,000 beds across these countries.

Between May 29 and June 9, IHH saw a sudden surge in share price and trading volume where share price gained 8.2% from RM5.62 to RM6.08. But the surge tapered off and share price fell slightly to RM6.00 apiece by last Thursday. However, over the period of one year, IHH’s share price had fallen by 5.82% from RM6.37 to RM6.00.