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EXCLUSIVE: Qualitas to push button on IPO next week

Malaysian-based primary healthcare provider Qualitas Medical Group is due to push the button on its S$150 million (US$114 million) IPO in Singapore next week. It will be the first mainboard healthcare listing since IHH Healthcare floated in Kuala Lumpur and Singapore in July 2012.

Backed by Singaporean private equity firm Southern Capital Group, global coordinators are CIMB and Credit Suisse with DBS and Daiwa as bookrunners.

Investors are expected to jump at the deal which will see around 25% of the group floated. Although no cornerstone investors have been signed up, it is significant that Southern Capital is not selling down any of its 78% stake, which post IPO will be around 55%.

A successful IPO from Qualitas will be a shot in the arm for the SGX. In recent months a number of healthcare companies have looked at other exchanges. In late February primary healthcare services provider Republic Healthcare said that it planned to IPO on Hong Kong’s junior GEM board while HKE Holdings, a Singapore-based contractor specialising in the medical and healthcare sectors, said it was looking at the same board in September last year.

Not that the SGX is as subdued as some critics would have you believe. Healthcare services group Clearbridge Health raised S$24.6 million in its IPO on the Catalist, SGX’s junior board, in late December. It sold 88 million shares, or 18.3% of its enlarged share capital, at S$0.28 per share. Its shares have performed well and were last seen at S$0.54. In the wings too is Luye Medical Group, the regional healthcare services arm of Luye Life Sciences Group. At the start of March it mandated Bank of America Merrill Lynch, Credit Suisse and UBS for its up-to S$500 million SGX IPO.

But Qualitas is very focused on Singapore and an SGX listing makes sense for the group. It is not raising a massive amount, valuations for healthcare companies in Singapore are healthy and that is where growth for the company is likely to come from. Although the group is looking for acquisitions across the region, a significant proportion of proceeds will be used to buy clinics in Singapore.

Although it is too early to talk about an indicative range, bankers are looking to IHH and Health Management International – both based in Malaysia – as well as Singapore businesses like Q&M Dental and Singapore Medical Group, for comps.

This is Qualitas’ second attempt at a float. Although pricing had been set on the deal and cornerstone investors had been signed up, it pulled an IPO in the autumn of 2015. Chairman and managing director Noorul Ameen Mohamed Ishack said that the decision had been taken thanks to unfavourable market conditions, though those away from the deal said that the water had been muddied as CIMB and Credit Suisse were looking after the IPO while a parallel private sale was also explored by via Rothschild. Investors were said to be confused by mixed messages.

Founded in 1997, Qualitas Medical  operates a network of clinics in Malaysia with medical centres in Singapore, India, and Australia. It was listed on Singapore’s Catalist board in 2008. It was taken private in 2011 for US$36 million.

Bookbuilding is expected to begin next week with a listing planned for mid April.

Posted on: 23/03/2018 UTC+08:00


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