Singapore's GIC invests RM750mil for 16% stake in Sunway Healthcare over three years

KUALA LUMPUR (June 23): Singapore's sovereign wealth fund GIC Pte Ltd is acquiring a 16% stake in Sunway Healthcare Holdings Sdn Bhd (SHH) for RM750 million, confirming The Edge Malaysia's newsbreak over the weekend on GIC acquiring a strategic stake in the healthcare arm of the Sunway group.

In a virtual media briefing, Sunway Bhd chairman Tan Sri Dr Jeffrey Cheah said the definitive agreement inked between the parties today stipulate that the group will only be withdrawing from GIC’s investment as and when it needs to, up to the maximum of RM750 million which will be spread over four different tranches over approximately three years.

Under the agreement, RM33.88 million of the investment will be granted upon the initial closing, followed by a first tranche of RM199.99 million six months after the initial closing; a second tranche of RM100 million 18 months after the date of the agreement; a third tranche of RM168 million 18 months after the date of the second closing; and a final tranche of RM281.99 million six months after the date of the third closing.

The agreement values SHH at RM4.69 billion, which was arrived at after evaluating proposals from various domestic and international investment funds, sovereign wealth funds and private equity firms.

“After a thorough assessment process, I am delighted to announce the partnership with GIC, a seasoned global healthcare investor. I am confident that the Sunway-GIC partnership will further enhance the value of Sunway Healthcare and that together we can realise the full potential of our healthcare business,” said Cheah.

He said the investment will be used to partly fund SHH’s expansion plans, mainly for the building of six more hospitals, bringing the total to eight hospitals with 3,000 beds altogether.

In total, the group will be spending about RM2 billion in capex over the next four to five years, with the investment from GIC to cover about 40% of the amount.

Besides that, the investment will also be used to repay some of its outstanding loans.

“We intend to construct, in the future, six more hospitals. The plan is on track and we will deliver on time. Hopefully in a couple of years down the road, we can do an IPO (initial public offering),” he said.

The group plans to list the healthcare unit within the next six to eight years, after considering that most of the hospitals that it intends to build will require three to four years to complete, according to Sunway chief financial officer Chong Chang Choong.

“The target of an eventual IPO between six to eight years from now is accounting for the new hospitals to reach a fairly mature stage,” said Chong, adding that the group is looking at listing in Malaysia for now.

In a statement, GIC chief investment officer of private equity Choo Yong Cheen said the fund is pleased to support the future growth of SHH.

“We are confident in the long-term growth potential of the company given its award-winning operating track record and focus on providing state-of-the-art medical infrastructure,” he said.

GIC head of direct investments group (Southeast Asia) of private equity Amit Kunal said the private healthcare segment in Malaysia will benefit from trends such as ageing population, the expanding and rising affluence of its middle class, as well as robust healthcare insurance penetration.

“In addition, medical tourism is expected to resume after Covid-19-related travel restrictions ease. Malaysia will remain an attractive medical tourist destination due to its good air connectivity and quality medical facilities in this region,” he said.

Trading in Sunway’s shares had been suspended since this morning, pending this announcement.

Yesterday, the counter closed up four sen or 2.3% at RM1.78, translating to a market capitalisation of RM8.78 billion.

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