Malaysian integrated healthcare provider IHH Healthcare has agreed to acquire the 600-bed Island Hospital in Penang for 3.92 billion ringgit (US$905.71 million).

A sales and purchase agreement for the all-cash deal was signed on September 4 between wholly owned IHH subsidiary Pantai Holdings and Comprehensive Care, a company established and majority-controlled by Asian private equity firm Affinity Equity Partners.

“Island Hospital presents a transformative opportunity for us in Malaysia. Its leading position in Penang, extensive specialist pool and clinical offerings, as well as its status as the hospital of choice for foreign patients, make it an asset that complements our growth plans in the country,” says IHH group chief executive officer Prem Kumar Nair.

Island is the largest private hospital in Penang and the leading hospital for medical tourism in Malaysia.

Penang is IHH’s second largest cluster in Malaysia. Adding Island Hospital – the largest private hospital in the state – will allow IHH to build on its leadership position in Penang and provide a platform for further growth. Post-acquisition, IHH will have more than 1,000 operational beds in Penang.

The group will also gain a larger share of medical travel into Malaysia. Island Hospital is the leading hospital for medical tourism, attracting approximately one in three foreign patients in the country. The hospital’s foreign patient volume has more than tripled under Affinity’s ownership.

IHH expects more than 200 million ringgit in synergies over the next five years following the acquisition. By aligning commercial practices and operations with those of IHH such as consolidated procurement, Island Hospital can enhance efficiency in its operations. As part of the broader IHH network, it can also drive more cross-referral opportunities to better serve more patients in Penang and across Malaysia for greater revenue.

Island Hospital holds a landbank valued at 223.4 million, with approvals secured for future development. IHH says this will future-proof its growth in the region and meet increasing healthcare demand from both local and foreign patients.

IHH is one of the largest private healthcare providers in Malaysia. Its network currently comprises 11 Pantai hospitals, four Gleneagles hospitals, Prince Court Medical Centre, and Timberland Medical Centre.

The Island Hospital deal is expected to be completed by the end of 2024. Citigroup Global Markets Singapore is the sole financial adviser to IHH on the transaction.