Thursday, 05 July 2012
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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.
Lee Wee Tak
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.
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“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.
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“With this listing, IHH can further cement its role as a leading force in the global healthcare sector,” he said.
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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?
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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.
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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
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)
Read more at:
http://wangsamajuformalaysia.blogspot.com/2012/07/ihh-healthcare-berhad-listing-for-it.html
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