Hot stock: HMI shares jump 9.1 per cent on privatisation offer

HEALTH Management International (HMI) shares jumped as high as 9.1 per cent on Monday morning, just over an hour after the market opened, on news of an offer by its management and private equity firm EQT to take the company private.

As at 10.12am, HMI shares were trading six Singapore cents higher at S$0.72. The counter last closed on July 4 at S$0.66, up 0.5 Singapore cent or 0.76 per cent. It called for a trading halt on July 5 before the market opened. 

Maybank Kim Eng has since downgraded its rating for HMI from "buy" to "hold", saying investors of HMI should take the S$0.73 offer price as the valuation "appears fair" and is a clean exit, according to its Monday report. 

CGS-CIMB called the cash option "fair but not compelling", deemed fair as it is on par with current valuations of Asean hospital operators. It did not change its "add" call and target price of S$0.68.

Meanwhile, UOB Kay Hian said PanAsia Health's offer is a healthy one to accept, while viewing the alternative of holding private shares with the uncertainty of future re-listing to be "undesirable".

HMI had announced on Friday a joint bid with PanAsia Health Limited to privatise by way of a scheme of arrangement that values HMI at approximately S$611 million. PanAsia Health Limited is a special-purpose vehicle incorporated in the Cayman Islands and indirectly controlled by EQT Mid Market Asia III GP BV (EQT GP).

If successful, HMI will become a wholly owned subsidiary of PanAsia Health and will be delisted from the Singapore Exchange.

Under the scheme, each HMI shareholder will be entitled to receive for each HMI share either S$0.73 in cash, or one new ordinary share at the same price in PanAsia Health.

The offer price represents significant premiums to the volume-weighted average price (VWAP) over the past few months. It is a premium of 29.7 per cent over the six-month VWAP, 27.4 per cent over the three-month VWAP and 24.8 per cent over the one-month VWAP.

HMI added that its closing share price has only exceeded the consideration offered by the scheme on one trading day since the company's listing in 1999.