SME Spotlight

Surgical practice offers 30m new shares in IPO

Dr Heah Sieu Min (left), the group's CEO, leads the private practice with chief operating officer Chia Kok Hoong. They are both surgeons. Including doctors, HC Surgical Specialists has 29 staff.
Dr Heah Sieu Min (left), the group's CEO, leads the private practice with chief operating officer Chia Kok Hoong. They are both surgeons. Including doctors, HC Surgical Specialists has 29 staff.PHOTO: HC SURGICAL SPECIALISTS

Shares offered at 27 cents each via placement ahead of Catalist listing

A group of surgeons offering procedures such as colonoscopies and gastroscopies in heartland locations has launched an initial public offering (IPO) ahead of a listing on the Singapore Exchange's Catalist board.

HC Surgical Specialists is offering 30 million new shares at 27 cents a share via a placement that aims to raise around $6.15 million in net proceeds. There is no public tranche, but members of the public can apply for shares via their brokers.

The placement will close at noon next Tuesday, and trading is expected to commence next Thursday. At 27 cents a share and a post-IPO share capital of 146 million, HC Surgical Specialists will have a $39.5 million market capitalisation upon listing.

Of the funds raised, $2.8 million will go towards expanding business operations locally and regionally, $1.2 million will be used to buy new equipment and for renovations, and $2.15 million is earmarked for working capital.

The private practice is led by chief executive Heah Sieu Min and chief operating officer Chia Kok Hoong, who are both surgeons, and comprises 10 clinics following a series of acquisitions over the last year.

On July 18, HC Surgical Specialists acquired a 51 per cent stake in Lai Bec and entered into an employment contract with Dr Lai Jiunn Herng, an expert in robotics-assisted colorectal resections for cancer. He will start contributing to the group from November.

On Aug 4, the group bought CTK Tan Surgery from Dr Charles Tan. CTK has a clinic at both Mount Elizabeth Novena and Gleneagles Hospitals. Dr Tan, who is trained in minimally-invasive thyroid and hernia surgery, started contributing to the group in September.

Two general practitioners have also been brought into the group this year.

Dr Heah said he will eventually acquire more doctors trained in the sub-specialities of breast surgery, liver surgery and stomach surgery.

Including doctors, HC Surgical Specialists has 29 staff.

Revenue in the 12 months to May 31 jumped 15 per cent from a year earlier to $7.9 million due to a rise in procedures undertaken. The revenue figures reflect only contributions from Dr Heah and Dr Chia.

The group posted a net profit of $2.7 million in the year ended May 31, down from a net profit of $3.3 million in the 2015 financial year as expenses rose from $3.5 million to $5 million over the period. This was due mainly to an increase in employee benefits, other expenses, finance costs and a share of associate losses.

Dr Heah said the company signed a non-binding agreement with T&T Group in January for rights to perform all endoscopy and day surgery at the Transport Hospital in Hanoi, Vietnam, for a stipulated period, though a timeline is yet to be set for when this will begin.

The group intends to pay out dividends of not less than 70 per cent of its profit after tax to shareholders over the next three years.

PrimePartners Corporate Finance is the issue manager, sponsor and placement agent.

A version of this article appeared in the print edition of The Straits Times on October 26, 2016, with the headline 'Surgical practice offers 30m new shares in IPO'. Print Edition | Subscribe