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Singapore’s GIC buying 16% stake of Sunway Healthcare for RM750m

KUALA LUMPUR: Singapore’s sovereign wealth fund GIC (Ventures) Pte Ltd is investing RM750mil for a 16% stake in Sunway Group’s healthcare business which will enable the latter to accelerate the expansion of its medical facilities including building new hospitals.

In a statement on Wednesday, Sunway Bhd said Greenwood Capital Pte Ltd – an indirect unit of GIC Ventures – had entered into a share subscription agreement to acquire the stake in Sunway Healthcare Sdn Bhd.

Greenwood is acquiring the stake from Sunway City Sdn Bhd, which is a unit of Sunway, for a total subscription consideration of RM750mil.

“The proposed investment entails the issuance by Sunway Healthcare and subscription by Greenwood of 100 million Sunway Healthcare shares representing 8.24% equity interest in Sunway Healthcare.

The investment includes “10 million irredeemable convertible preference shares (ICPS) which can be converted upon election by Greenwood into 94.22 million Sunway Healthcare shares representing 7.76% equity interest in Sunway Healthcare and one cumulative irredeemable dividend convertible preference share (DCPS) which can be converted into one Sunway Healthcare share.

Sunway said these will collectively give Greenwood a 16% equity interest in Sunway Healthcare on a fully converted basis in exchange for a RM750mil investment, implying an equity value of RM4.68bil.

“As Sunway Healthcare is expected to generate stable cashflows and will be incurring capital expenditures in a staggered manner, the company has agreed that the subscription amount will be paid over five tranches, ” it said.

Sunway said the subscription amount will be used for capital expenditures to expand existing hospitals, namely, Sunway Medical Centre Sunway City, Selangor and Sunway Medical Centre Velocity, Kuala Lumpur.

It would also be used to develop new medical facilities, namely, Sunway Medical Centre Seberang Jaya, Penang, Sunway Medical Centre Damansara, Selangor, Sunway Medical Centre Ipoh, Perak, Sunway Medical Centre Kota Bharu, Kelantan, Sunway Medical Centre Iskandar, Johor and Sunway Rehabilitation Hospital Paya Terubong, Penang.

The funds would also be used for working capital purposes which include, but not limited to, the day-to-day operating and administrative expenses of the proposed Sunway Healthcare Group.

On the rationale, Sunway said Greenwood’s investment will allow the proposed Sunway Healthcare Group to accelerate its intended expansion plans while prudently managing the financial risk profile of both the proposed Sunway Healthcare Group and the Sunway Group.

In addition, the proposed investment provides external validation of Sunway Healthcare Group’s expansion plans by a seasoned healthcare investor.

“The proposed Investment is in line with the Sunway Group’s strategic direction where the healthcare division of the Sunway Group will undertake a capacity expansion at the flagship Sunway Medical Centre Sunway City, Selangor and Sunway Medical Centre Velocity, Kuala Lumpur and has embarked on an expansion plan to build six more hospitals over the next few years within its integrated developments in Malaysia, ” it said.

Sunway said the proposed Sunway Healthcare Group also intends to expand into other healthcare related businesses such as home healthcare, senior living residences, telemedicine centre, traditional and complementary medicine centres, among others.

It added the funds would be used to finance the capital expenditures and working capital requirements while reducing reliance on debt financing.

“The proposed investment is also an opportunity for the Sunway Group to bring in Greenwood, an affiliate of GIC Private Limited, Singapore’s sovereign wealth fund and a global long-term investor.

“As a business partner, Greenwood would work together with Sunway to add value to the Proposed Sunway Healthcare Group’s operations and help strengthen Sunway’s position in Malaysia’s private healthcare segment, ” it said.

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