Thursday, September 29, 2016

Fullerton (IPO)

Fullerton's IPO valuation premium predicated on acquisitions
- Fullerton Health intends to launch an IPO of 140.3m shares of which 93m are new shares and 47.3m vendor shares by Abraham Healthcare, Oceanfront Investments and Web Dragon.
- The IPO is expected to be priced between $1.70 to $1.80 per share, with the current indicative offer price of $1.73.
- The IPO will be fully underwritten by JP Morgan, UBS, Credit Suisse and DBS Bank.
- The group currently owns 198 self-owned clinical facilities on top of its network of 8,000 associate hospitals and clinics.
- Of particular concern however, is the possibility of dilution to potential investors as Fullerton has agreed to issue new shares to Salamat Investments (linked to GIC)

Based on its indicative IPO price, Fullerton would be valued at $1.285b, which would translate to a FY15 EV/EBITDA of 33x, a significant premium over its peer range of 20-25x. We do note however that Fullerton’s EBITDA has upside potential arising from its acquisitions made in May ’15.

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