Demand high for Advanced Health on AltX

Published Apr 24, 2014

Share

Johannesburg - There are likely to be disappointed hopefuls when the listing of Advanced Health’s shares becomes effective on the the JSE’s junior AltX board tomorrow.

Shares in a prelisting offer of 80 million shares at R1 each were oversubscribed by two-and-a-half times by the time the offer expired last Thursday.

Carl Grillenberger, the chief executive of Advanced Health, said yesterday that the firm had received “just short of 1 300 applications” for 217 million shares but the company was not prepared to extend its original offer.

“We are going to stick to that. There are still refunds to be made,” Grillenberger said.

The firm later added in a statement on the JSE’s news service that “applicants applying for more than 100 000 shares will receive 100 000 shares plus a proportional percentage of the remaining pool”. The excess applications would be refunded on an equitable basis, it said.

Advanced Health provides short procedure surgical facilities and services in South Africa, where it owns two day hospitals: Medgate Day Clinic in Roodepoort in Gauteng and eMalahleni Day Hospital in Mpumalanga, and intends to add 10 more facilities over the next three years.

It also operates similar services and three-day hospitals in Australia, where it is also constructing a five-theatre-day hospital in Sydney.

The JSE prelisting offer was launched on March 31 and closed on April 17. The offer has been partly underwritten for R20m by Eenhede Konsultante, according to the prospectus.

The offer attracted significant interest from institutional investors. Less than 2 million shares had been allocated to foreign buyers, Grillenberger said. Proceeds from the offer would be used for expansion.

The company is constructing a day hospital in Soweto.

“We will finance most of the construction via property investors. We will secure long-term leases,” Grillenberger said, adding that about R10m was allocated towards each hospital.

Warwick Lucas, the equity analyst at Imara SP Reid, said: “Any facility that promises to push health-care costs down the curve has got to have immediate demand for its services. Also, shareholders with long memories who invested in Grillenberger’s Presmed, (listed from 1987 to 1995) will have fond memories of their successes and obvious entrepreneurial ability.”

Lucas said ratings for hospitals currently listed on the JSE were “astonishingly high”.

“I think earlier concerns about government interference in the market have given way to realisations that the government knows that interference in the form of price control is useless.

“It has cost this country too many skilled doctors already; doctors who have more pricing power than ever before.”

The FTSE/JSE Africa health index, which is a market capitalisation weighted index on which hospital industry heavyweights Netcare, Mediclinic and Life Healthcare are represented, had gained 9.44 percent so far this year by mid-afternoon yesterday, trailing behind the indices for the insurance, pharmaceuticals and mining sectors.

Related Topics: