Thursday 22 Feb 2024
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This article first appeared in The Edge Malaysia Weekly on September 11, 2023 - September 17, 2023

SIME Darby Bhd and its partner Ramsay Health Care Ltd’s plan to sell off their equally controlled joint venture — Ramsay Sime Darby Health Care Sdn Bhd — is understood to have generated interest among major healthcare players in Asia, sources say.

They include Columbia Asia, Sunway Healthcare Holdings Sdn Bhd, Bangkok Dusit Medical Services PCL, Bumrungrad Hospital PCL and possibly even Apollo Global Management Inc and an Indonesian player, informed sources say.

In an email response to The Edge, Sime Darby, which has 50% equity interest in Ramsay Health Care, says: “Sime Darby, with our partner Ramsay Health Care, is currently exploring the sale of our 50:50 joint venture Ramsay Sime Darby Health Care. There has been significant interest from various industry players and the assessment process is ongoing. Hence, it would be premature to elaborate on any specific details at this juncture.

“The group, as a listed entity on Bursa Malaysia, is committed to its continuous disclosure obligations, and will keep the market informed as and when appropriate should there be any pertinent developments to be announced on this matter,” the diversified conglomerate says.

Sime Darby is in the process of taking over UMW Holdings Bhd in a RM5.84 billion deal, which will make it one of the largest automotive players in the region. Other than a large auto arm, Sime Darby also has a heavy machinery business under the Caterpillar brand.

One source says: “It (the offer to sell) has basically attracted the who’s who regionally … with the exception of IHH [Healthcare Bhd]’.”

To recap, IHH, which is among the giants in the industry and one of Asia’s largest private healthcare operators with a market capitalisation of almost RM52 billion, had submitted a proposal in March 2022 to acquire Ramsay Sime Darby Health Care at an indicative price of RM5.67 billion, but the deal fell through in September that same year.

All IHH said was that the discussions with Ramsay Sime Darby Health Care’s shareholders did not result in a binding agreement.

The interest generated is understandable, considering Ramsay Sime Darby Health Care owns and operates seven hospitals in Malaysia and Indonesia, including Ara Damansara Medical Centre, Subang Jaya Medical Centre, ParkCity Medical Centre and Bukit Tinggi Medical Centre, in Malaysia and RS Premier Jatinegara in Jakarta, RS Premier Bintaro and RS Premier Surabaya in Indonesia.

For its financial year ended June 30, 2022 (FY2022), Ramsay Sime Darby Health Care chalked up an after tax profit of RM92.62 million on revenue of RM1.15 billion. In FY2021, it registered an after tax profit of RM69.73 million from RM1.05 billion in sales. Over the past three financial years the healthcare provider has dished out RM370.27 million in dividends.

As at end-June 2022, Ramsay Sime Darby Health Care had total assets of RM1.68 billion and total liabilities amounting to RM751.93 million. During the period in review, the company had retained earnings of RM446.44 million.

More about the interested parties

Columbia Asia has 13 hospitals in Malaysia, with one in Bukit Jalil, Kuala Lumpur, opening soon. In Indonesia, the group has three hospitals in Medan, Pulomas and Semarang, while in Vietnam, it has three hospitals in Binh Duong, Gia Dinh and Ho Chi Minh City.

In September 2019, billionaire Tan Sri Quek Leng Chan’s Hong Leong Group, partnering with private equity firm TPG, acquired Columbia Asia’s hospitals in Southeast Asia for US$1.2 billion or about RM5 billion then, from Seattle-based International Columbia USA LLC.

Quek and TPG were said to have pipped Sime Darby for the hospitals.

Sunway Healthcare is 84% controlled by Sunway Bhd, with the remaining 16% held by Singapore’s GIC Pte Ltd. To recap, GIC had acquired the 16% stake for RM750 million in June 2021.

Sunway Healthcare Group has hospitals in Seberang Jaya and Paya Terubong, Penang; Sunway Damansara, Selangor; Iskandar Puteri, Johor; Ipoh in Perak; Kota Bahru in Kelantan among others.

In its financial year ended Dec 31, 2022, Sunway Healthcare raked in an after tax profit of RM209.91 million on revenue of RM1.06 billion. For the year in review, it had total assets of RM2.93 billion and total liabilities of RM462 million.

Bangkok Dusit Hospital Services, which is listed in Bangkok, has a market capitalisation of US$12.31 billion, and has six main hospital groups: Bangkok Hospital Group, Samitivej Hospital Group, BNH Hospital, Phyathai Hospital Group, Paolo Hospital Group and the Royal Hospital Group with a total of 47 hospitals in Thailand and two in Cambodia, in Phnom Penh and Siem Reap.

Bumrungrad Hospital, which is publicly traded in Bangkok, is a US$5.7 billion market capitalisation outfit and operates Bumrungrad International Hospital, Bumrungrad International Clinic, Vitallife Scientific Wellness Center, Vitallife Skin Clinic, Bumrungrad International Dialysis Clinic and Esperance Cancer Clinic in Bangkok, Bumrungrad Clinic Yangon in Myanmar and Ulaanbaatar Songdo Hospital in Mongolia.

While US private equity firm Apollo Global Management’s interest is still not clear, the group with assets under management of more than US$500 billion is a heavyweight.

At press time, Apollo had yet to respond to questions sent by The Edge.

In July 2018, Apollo acquired US rural hospital chain operator LifePoint Health Inc valuing it at US$5.6 billion, and merged it with its own RCCH HealthCare Partners.

Sime Darby’s shares closed at RM2.19 apiece last Friday, translating into a market capitalisation of RM15.62 billion.

 

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