Private healthcare provider Qualitas Healthcare Corp Bhd, which has temporarily halted its listing plan on the Main Market of Bursa Malaysia, is currently in talks to acquire RadLink-Asia Pte Ltd, a Singapore-based diagnostic and molecular imaging service provider, sources said.
RadLink, which is a unit of India’s Fortis Healthcare group, was in the news recently as a deal had been struck for it to be acquired by the Malaysian-listed medical giant IHH Healthcare Bhd. Just two weeks ago, the Competition Commission of Singapore (CCS) had blocked the deal on the basis of “a substantial lessening of competition” in affected markets.
This is because IHH also owns Parkway Pantai Ltd, a large healthcare group with hospitals and related businesses across Malaysia and Singapore.
According to the CCS, Parkway would have become the only commercial supplier of radiopharmaceuticals in Singapore had it acquired RadLink.
IHH was said to be looking to pay around RM345.6mil for RadLink.
It is understood that the failed sale to IHH had provided an unexpected opportunity for Qualitas to buy RadLink.
Qualitas, meanwhile, operates primary healthcare centres across Malaysia, Australia, Singapore and India. These are generally outpatient services provided at general practitioner (GP) clinics.
Qualitas’ initial public offering (IPO) would have valued it at around RM795.5mil in terms of market capitalisation.
Officials from Qualitas and Fortis had yet to respond to queries from StarBiz.
“If the merger and acquisition (M&A) for RadLink goes through, it would change the valuation of Qualitas for its planned IPO, and hence, the postponement of the IPO,” said a source.
Qualitas has already secured strong interest from funds to become cornerstone investors in its IPO, including Permodalan Nasional Bhd, RHB Asset Management Sdn Bhd, Etiqa Insurance & Takaful, Great Eastern Life and Eastspring Investments.
Qualitas is reportedly looking at an issue price of around 80 sen a share for its IPO, valuing it at about 28.9 times its financial year 2015 (FY15) earnings.
However, late last week, Qualitas had informed its advisors and potential investors that during the IPO process, a potential M&A development had taken place.
Qualitas said that it expected to come back to the market “in the near future”, referring to its listing exercise.
Qualitas is seeking to raise about US$150mil (RM553mil) from its IPO, which is expected in April.
Almost all of its listing proceeds would be used to expand its presence in the region through M&As, and it is also looking to expand into ambulatory care services.
According to Qualitas’ draft prospectus, the group owns and operates 94 GP clinics under the Qualitas brand and a further 133 affiliate GP clinics in Malaysia, commanding a market share of 27.6% in 2013, based on Frost & Sullivan’s research.
In Australia, the group operates 11 comprehensive primary-care centres, and added one more medical centre in Melbourne in September 2014.
It also operates a medical and wellness centre in India, as well as a GP and a paediatric practice predominantly catering to expatriates in Singapore.
About 53% of Qualitas’ FY13 revenue of RM249.14mil came from its primary healthcare centres across Malaysia, Australia, Singapore and India.
Among its local competitors are Klinik Mediviron Sdn Bhd, Poliklinik Penawar and Poliklinik Kumpulan City.
RadLink, meanwhile, is an investment holding company and its principal activity (through its subsidiaries) is the provision of healthcare services, including outpatient diagnostic and molecular imaging services in Singapore.
According to its website, the company is the largest provider for the private diagnostic and molecular imaging chain, including four diagnostic imaging centres.
The company also provides comprehensive primary care services via its network of medical practitioners throughout Singapore.