KUALA LUMPUR, July 12 (Reuters) - IHH Healthcare Bhd , Asia's largest hospital operator, is expected to achieve a rich pricing on Thursday ahead of its up to $2.2 billion listing as strong investor interest reinforces Malaysia's gloom-defying IPO market this year.
Institutional demand for the world's third-largest IPO in 2012 was 80 times larger than the amount of shares offered, according to two sources familiar with the deal, excluding the amount set aside for its 22 cornerstone investors.
That should result in a price at the top end of the indicative range of 2.67 to 2.85 ringgit per share as IHH prepares to debut on the Malaysian and Singaporean bourses on July 25.
At 2.85 ringgit per share IHH would have a market value of 22.9 billion ringgit ($7.2 billion), making it the world's second-biggest listed healthcare provider after U.S. hospital operator HCA Holdings Inc.
"The book is way, way, way covered at the high end," said one of the sources, who declined to be identified. "The majority of the demand comes from domestic and international long-only funds. International demand is around 60 percent and there's little price sensitivity."
IHH, behind only Facebook Inc and Malaysia's Felda Global Ventures Holdings Bhd's in market debut size this year, has attracted investors ranging from sovereign wealth fund Kuwait Investment Authority to International Finance Corp , the private investment arm of the World Bank.
Malaysian IPOs have managed to defy the global gloom partly due to the government's heavy hand in the economy, deep local pension funds and the large role of domestic investors.
The healthcare arm of Malaysia's state investor Khazanah Nasional, IHH is one of the few available plays on the healthcare sector in the region, where rising incomes and an expanding middle class are boosting demand for better services.
Thailand's Bumrungrad Hospital PCL recently saw its entire 25 percent stake worth around $143 million in Bangkok Chain Hospital snapped up through an accelerated book-build in just a few hours.
With its dual listing in Singapore, IHH joins Kuala Lumpur-listed KPJ Healthcare Bhd, Singapore's Raffles Medical Group, Bangkok Dusit Medical Services and India's Fortis Healthcare among major listed Asian health-service providers.
IHH's IPO consists of 2.23 billion shares with an over-allotment option of up to 170 million shares, putting the total offering at $2.16 billion.
IHH, which counts Japan's Mitsui & Co and Dubai-based Albraaj Capital as shareholders along with Khazanah, embarked on an aggressive overseas shopping spree in recent years.
It added Turkish hospital group Acibadem AS, Singapore's Parkway Holdings and India's Apollo Hospitals Enterprise Ltd to its local holdings Pantai Hospitals and International Medical University.
"In terms of scale it is unprecedented. On valuation it is not cheap," said Chua Jen-ai, a Singapore-based equity analyst Swiss wealth manager Julius Baer.
"The valuation at the high end gives the benefit of doubt to IHH's execution and if the earnings fall short -- for example if growth in Turkey or the earnings ramp up at the new Mount Elizabeth Novena (in Singapore) are less-than-expected -- then the IPO would seem a bit expensive."
IHH's listing will cement Malaysia as the Asia-Pacific region's hottest new issue market this year, outpacing both Shenzhen's ChiNext board and traditional IPO giant Hong Kong.
Felda's successful debut late last month came in sharp contrast to the tumble in equity capital markets activity and pulled deals in Hong Kong, London and Singapore.
Bank of America-Merrill Lynch, CIMB and Deutsche Bank are the lead global coordinators for the IHH listing, with Credit Suisse, DBS, Goldman Sachs and Maybank acting as joint bookrunners.