Under the agreement, IHH Healthcare is set to acquire a 100% stake in Island Hospital.

IHH Healthcare has agreed to acquire Island Hospital in Penang from Affinity Equity Partners. 

The group, through its wholly-owned subsidiary, Pantai Holdings, entered into a sales and purchase agreement (SPA) with Comprehensive Care, which is majority-controlled by Affinity Equity Partners, on Sept 4.

Under the agreement, IHH Healthcare Q0f is set to acquire a 100% stake, or 20 million ordinary shares, in Island Hospital for a total equity consideration of RM3.92 billion ($1.18 billion). 

According to the group, Island Hospital will integrate “seamlessly” into IHH’s portfolio of healthcare brands in Penang. The hospital, which was established in 1996, has nearly 119 resident and visiting specialists across nine Centres of Excellence. 

As the largest private hospital in Penang with 600 beds, IHH will have over 1,000 operational beds in the city post-acquisition. According to the group, this will allow it to gain a larger share of medical travel in Malaysia. Island Hospital is said to be the leading hospital for medical tourism with the hospital receiving about one in three inbound foreign patients to the country. Under Affinity’s ownership, the number of foreign patients to Island Hospital has more than tripled.

Moving forward, IHH expects more than RM200 million in synergies over the next five years following the acquisition. 

Prem Kumar Nair, group CEO of IHH Healthcare, says: “We expect significant synergies from the transaction and a unique opportunity to elevate Island Hospital as a leading integrated medical facility in Asia. In keeping with our ‘ACE’ framework, we will continue to drive sustainable growth in Malaysia and across our global network to deliver value for our stakeholders.”

Currently, Island Hospital holds a landbank valued at RM223.4 million, with approvals secured for future development. 

The acquisition is expected to be completed by the end of 2024 after which, Island Hospital will become the 18th hospital within IHH Malaysia’s network. 

Jean-François Naa, CEO of IHH Healthcare Malaysia, says: “With the acquisition of Island Hospital, we are strengthening IHH Healthcare Malaysia’s footprint in Penang and enhancing our position as the leading private healthcare provider in Malaysia.”

Shares in IHH Healthcare closed at 1 cent lower, or down 0.52%, at $1.91 on Sept 4.