Buying more in Parkway under a long-term investment plan.
Khazanah Nasional Berhad’s plan to acquire a 51 per cent stake in Parkway Holdings seems more in tune with its investment pattern than a decision solely meant to snatch the management control from Fortis Healthcare.
Khazanah, the investment holding arm of the Malaysian government, is the largest shareholder in all Malaysian companies (where it has a stake) which have made significant investments in India.
For instance, Khazanah has a 60 per cent stake in Malaysian Airports, which, in turn, is an equity partner in GMR Hyderabad International Airport Ltd (GHIAL). The Malaysian company’s involvement in GHIAL is for the long term and ends only by 2038. Similarly, Khazanah is the largest shareholder (40 per cent) in Malaysian telecom major Axiata, with over 15 per cent stake in Idea Cellular.
Infrastructure and construction major UEM, yet another Malaysian company with significant investments in India, is majority-owned by Khazanah. Its real estate arm, UEM Land, is wholly-owned by Khazanah.
Industry experts feel Khazanah’s plan for majority stake in Parkway, the company that runs Asia’s largest hospital network, is more in tune with its long-term investment plans. The majority of Parkway’s shares were with equity funds before Fortis acquired a 23.9 per cent stake from US-based fund TPG Capital in March this year.
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“While Khazanah felt no threat to its long-term interests as long as Parkway remained owned by investment firms, Fortis — promoted by brothers Malvinder and Shivinder Singh — had specific global growth ambitions, with Parkway as their launch pad. This could be the reason for Khazanah’s bid,” an investment banker said.
According to Khazanah, its overseas investments are selective and in line with its mandate to “build linkages into sectors and geographies that are important to Malaysia’s long-term competitiveness”. It highlighted the 135 per cent recovery in Parkway’s share price in 2009 as a result of its restructuring and business improvements at Pantai Hospitals – a 60:40 joint venture between Khazanah and Parkway, and Parkway Holdings (where Khazanah has nearly 24 per cent stake).
| KHAZANAH’S TREASURE (as on December 31, 2009) | |||
| Financial Services | 23.0 | COUNTRY WISE INVESTMENT | |
| Media & Communications | 21.3 | Malaysia | 88.8 |
| Infrastructure & Construction | 19.4 | Singapore | 3.2 |
| Utilities | 16.0 | India | 2.4 |
| Property | 6.3 | Indonesia | 2.0 |
| Transportation & Logistics | 4.7 | China | 1.8 |
| Healthcare | 3.0 | Others | 1.8 |
| Automotive | 1.1 | ||
Three years ago, Khazanah picked up a 9.95 per cent stake in Infrastructure Development Finance Company (IDFC) and became the second largest shareholder after the Indian government, which held 23 per cent. It had said investment in IDFC was expected to enhance the position of Khazanah and Malaysian companies in the Indian infrastructure sector.
“The sector is expected to experience one of the highest growth rates in the booming Indian economy and is one where Malaysian infrastructure companies have demonstrated competitiveness,” it had stated.
Experts feel Khazanah wants Parkway to be its growth engine in the healthcare sector. “Returns from investments in Indian healthcare sector will be very high. This must be the reason for Khazanah’s interest (in Indian healthcare sector),” Vishal Gandhi, VP, life sciences and technology, YES Bank, said.
One of Khazanah’s earliest investments in India was in healthcare . It had picked up 13.2 per cent in Apollo Hospitals in 2005, saying it presented a strong platform to participate in the high-growth opportunities of the Indian economy and the broader regional healthcare sector. Khazanah remains invested in Apollo and are represented on the Apollo Board.
Incorporated in 1993, Khazanah has a nine-member board, comprising representatives from the public and private sectors, and is chaired by the Malaysian prime minister. It has stakes in more than 50 companies, with assets worth $28 billion (about Rs 1,30,900 crore).