New Frontier Corp, the New York-listed investment arm affiliated with New Frontier Group, has agreed to buy United Family Healthcare for US$1.44 billion to create one of the biggest publicly traded health care service companies in China.
New Frontier will buy the stake in United Family, one of the largest privately-held hospitals on the mainland from private equity firm TPG and Shanghai Fosun Pharmaceutical Group, according to a press release.
New Frontier will use proceeds from its initial public offering, private placements and loan facilities to fund the acquisition, it said.
China’s ageing demographics at a time of growing demand for an alternative to overcrowded state-funded hospitals have drawn a spotlight on the promising outlook for health care related services.
Our goal is to continue building and growing our integrated health care platform in China
Antony Leung, chairman of New Frontier Group
Private hospital revenues grew at an annual compound rate of 25 per cent between 2013 to 2017, according to the National Health Commission of China.
“Health care has been an important strategic focus for New Frontier,” said Antony Leung, chairman of New Frontier Group.
“Our goal is to continue building and growing our integrated health care platform in China... We believe we will be a strong strategic partner given our significant operating and investment experience.”
United Family Healthcare, which started in China in 1997, currently has nine hospitals and more than 700 licensed beds in first and second-tier cities in China.
The company is expected to deliver revenue of 2.5 billion yuan (US$363.3 million) this year.
United Family Healthcare is expected to post an 18 per cent compound annual growth rate in revenue and a 50 per cent annual growth rate in profit over the next five years as a result of organic growth from capacity expansion, Leung said.
Shares of New Frontier were up 0.6 per cent to US$10.24 in New York following the morning announcement Tuesday during US trading hours.
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