Bain Capital Buys Asian Hospital Chain for $150 Mil

Bain Capital LLC has entered the race to develop private hospitals in China by paying $150 million for a controlling interest in Asia Pacific Medical Group, according to a report today in the Wall Street Journal.

The private equity firm, which was founded by US politician Mitt Romney, has taken an unspecified stake in the 24-year-old healthcare operator, which controls a network of 22 clinics and seven hospitals in China and Southeast Asia, and bills itself as the fastest growing international healthcare provider in China.

Investors have show a healthy enthusiasm for medical projects on the mainland since China announced in 2014 that it would allow 100 percent foreign-owned hospitals, with real estate developers such as Dalian Wanda and China Evergrande joining other investors in seeking ways to bring foreign medical expertise to China’s rapidly aging population.

Funding Asia Pacific Medical Group’s Expansion Plans

Bain’s investment in Asia Pacific Medical Group is aimed at expanding the company’s services into more of China’s big cities, the Journal said, citing sources familiar with the deal.

In 2010, French private equity firm invested $25 million into Asia Pacific Medical Group to help the company, which was founded by a group of 35 US-trained doctors, including its chairman, Michael Choy, to expand its network of medical facilities.

Asia Pacific Medical Group’s hospitals include Shanghai Gamma Knife Hospital, which was established in 1992 as a joint venture with Fudan University-affiliated Hua Shan Hospital; Shanghai St. Michael Hospital, located in Shanghai’s Gubei area; Beijing Puhua International Hospital; and the Beijing Puhua Clinic.

During 2013, IFC, a member of the World Bank Group, agreed to buy shares worth $20 million in Asia Pacific Medical Group, to help the company expand. At the time APMG operated a network of six hospitals and one clinic in China, as well as twelve clinics in Southeast Asia.

The medical group said that its facilities serve both the local and international communities in China. Bain closed on a $3 billion Asia investment in fund in December last year, with health care being one of the primary focuses of the fund.

Bain Deal Follows Evergrande-Harvard Tie-Up

The news of Bain’s acquisition of Asia Pacific Medical Group comes just days after top five Chinese property developer Evergrande Real Estate finalised its own agreement to build private hospitals in China. The developer, which is controlled by billionaire Hui Ka-yan, had signed a preliminary agreement with Harvard’s Brigham and Children’s hospital in 2013, aimed at establishing private hospitals on the mainland.

In China, where the number of people over 60 is expected to double within 30 years, most medical care is still provided by overstretched government facilities, which typically a low standard of service.

This shortcoming has provided an opportunity for other property developers, besides Evergrande, with Wang Jianlin’s Dalian Wanda in January signing a RMB 15 billion ($2.3 billion) agreement with the UK’s International Hospitals Group (IHG), to invest RMB 15 billion ($2.3 billion) to build a total of three new health care facilities in the cities of Shanghai, Qingdao and Chengdu.

In January of this year Chinese private equity firm Hillhouse Capital Group announced that it had teamed up with the Mayo Clinic (a renowned medical centre from Mingtiandi’s hometown) to form a joint venture medical service provider in China.

Perennial Real Estate Holdings is also active in the health care sector, with the Singaporean firm launching two new private hospitals in January –its second and third private healthcare projects in China. The real estate investment firm says it has plans to add up to 40 such developments across the country.