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Record Debut for Hospital Operator Mitra Keluarga

MARCH 24, 2015

Jakarta. Shares of local hospital operator Mitra Keluarga Karyasehat climbed by a quarter on its first day of trading on the local stock exchange, highlighting high investor demand for fast-growing health-care services in the country.

Mitra Keluarga’s shares closed at Rp 21,200 per share on Tuesday, which is 24.7 percent higher than the offering price.

Mitra Keluarga, a unit of state-owned drug maker Kalbe Farma, raised Rp 4.4 trillion ($341 million) last week, the largest initial public offering since that of national flag carrier Garuda Indonesia in 2011.

“Health-care shares are generally expensive because the demand is high. You can’t avoid hospitals when you’re sick and so health-care shares, such as Kalbe Farma and Mitra Keluarga, are largely weather-proof,” said Michael Steven, president director of Kresna Graha Sekurindo, the lead arranger for the share sales.

Recent data from the Health Ministry shows that Indonesia currently has 2,391 hospitals, of which 64 percent are privately owned. The remainder are government-run.

Mitra Keluarga is the second private hospital operator to list on the local stock exchange after Siloam International Hospital’s debuted with a Rp 1.4 trillion IPO in 2013.

Hospital services in Indonesia may see greater growth in the coming years, thanks to the government’s universal health-care initiative, which was launched last year, according to Reza Priyambada, an analyst at NH Korindo Securities.

“Mitra Keluarga also gives an additional option for investors to tap into that growing sector,” he said.

Health-care spending in Indonesia reached 3.4 percent of per-capita income in 2013, compared to just 2 percent a decade earlier, according to data provided by the Central Statistics Agency (BPS). Per-capita income has more than tripled in that time to Rp 36 million.

Kresna’s Michael said investors had noted the potential in the health-care sector, and that Mitra Keluarga’s shares were 10 times oversubscribed.

Mitra Keluarga currently operates 11 hospitals within the Greater Jakarta region and in Surabaya, East Java.

“We aim to open seven new hospitals over the next five years and the IPO proceeds will mostly go towards this expansion plan,” Rustiyan Oen, Mitra Keluarga’s president director, said during a press conference in Jakarta on Tuesday.