KPJ ... Dec12

KPJ is aggressively looking at more mergers and acquisitions (M&As) following its recent buy of a stake in a Thai hospital. KPJ has aspirations to have a regional footprint and they are pursuing that actively.

KPJ recently forked out RM60.5mil to buy a 23.4% stake in Thailand 's Vejthani Public Co Ltd (VPCL), which operates the Vejthani Hospital , a multi-specialty private hospital in Bangkok . This deal was likely to be a prelude to a larger exercise.

Market observers recommended the group's asset light model by injecting its hospital assets into the Aqar Reit and even speculated that a special cash dividend could be in the offing. By injecting its hospital assets into Aqar Reit, KPJ minimises its asset base to fuel its expansion, therefore keeping net gearing at a minimum and maximising returns on equity.

In early 2012, KPJ said it would spend RM2bil over the next five years to build new and expand existing hospitals locally and abroad. Despite its rapid expansion, KPJ did not need to raise any cash, as it has commercial papers and medium-term notes of RM250mil which could be utilised if necessary.