Khazanah divests Prince Court Medical Centre to IHH Healthcare for $240m

The Khazanah Nasional Berhad logo is displayed on a laptop. Photo: Thitikorn Suksao/DealStreetAsia

Malaysian sovereign wealth fund Khazanah Nasional Bhd announced on Tuesday it has divested its stakes in Prince Court Medical Centre to IHH Healthcare Bhd for 1.02 billion ringgit cash ($240 million).

Khazanah, via its wholly-owned indirect subsidiary Pulau Memutik Ventures Sdn Bhd, has signed a share purchase agreement with Pantai Holdings Sdn Bhd – a wholly-owned indirect subsidiary of IHH Healthcare – to divest its 100 per cent stake in Prince Court Medical Centre.

The $33-billion sovereign wealth fund strategically acquired Prince Court Medical Centre in 2018 with the view of building up the healthcare services sector in Malaysia and to promote Kuala Lumpur as a destination of choice for quality healthcare in the region.

“Given the recent change in Khazanah’s refreshed mandate, the decision was made to sell the business to IHH, Khazanah’s healthcare platform,” said the fund.

The proposed divestment will enable Prince Court Medical Centre to fully benefit from being integrated into IHH’s Malaysian operations and its broader global network. It would also strengthen IHH’s overall position in the domestic healthcare services market, with Khazanah’s continued contributions through its involvement in IHH.

“This transaction is in line with our refreshed mandate and provides Khazanah with the liquidity for our future investment capital requirements. In addition, Khazanah is confident that Prince Court Medical Centre will further benefit from IHH’s wealth of experience in providing premium healthcare, whilst solidifying IHH’s position as a leading Malaysian healthcare operator, where we remain as a substantial shareholder with a 26.04 per cent stake,” said Khazanah managing director Shahril Ridza Ridzuan.

The deal will be completed in the first quarter of 2020, subject to the approvals of the relevant authorities and non-interested shareholders of IHH, amongst others.

Khazanah’s most recent divestment has been its joint venture with Singapore’s investment fund Temasek Holdings. In July, Hong Kong-based private equity firm Gaw Capital and Allianz Real Estate teamed up to acquire Ophir-Rochor Commercial (ORC) from M+S for $1.2 billion.

This March, Khazanah announced a refreshed mandate to grow Malaysia’s long-term wealth amidst an ongoing restructuring, which will see the fund classify its assets into separate commercial and strategic funds.

In April, it divested $255 million worth of shares in one of its strategic assets – electric utility company Tenaga Nasional Bhd. A spokesperson said the sale is part of Khazanah’s ongoing strategy to restructure its portfolio. All the proceeds will be used for the fund’s balance sheet and reinvestment purposes.

In the same month, Khazanah shut the doors of its London office – an effort to redirect its focus on Asian investments and to reduce operating costs.

The sovereign wealth fund is also working to help Malaysia’s loss-making national carrier Malaysia Airlines Bhd (MAS) to turn around its business. MAS, which is fully-owned by Khazanah, had missed its target to breakeven last year, causing the fund a $1.78 billion impairment loss in 2018.