Fosun International has acquired a 5.11 percent stake worth $65 million in US senior housing operator Brookdale Senior Living, according to a filing with the US Securities and Exchange Commission. Through the investment, the Shanghai-based conglomerate replaces Blackrock as the fourth-largest shareholder in Brookdale.
The acquisition brings the value of Fosun’s cross-border investments to more than $300 million this month, even as other Chinese firms such as Anbang Insurance Group and HNA Group cope with hangovers from their overseas buying binges.
Fosun Succeeds Where Zhonghong Failed
Fosun’s investment comes after another mainland conglomerate failed in a potential $4 billion bid to buy out Brookdale last year. In June, Zhonghong Zhuoye Group, which had earlier bought out Blackstone’s $449 million stake in SeaWorld, was said to be close to acquiring Brookdale. Talks stalled after the Chinese firm hit a roadblock in securing onshore financing for the deal, the Financial Times reported in August.
Brookdale operates independent living, assisted living, and dementia-care communities and continuing care retirement centres, with around 1,023 communities in 46 US states, and capacity to serve 101,000 residents. The average occupancy at the company’s properties was 85.2 percent last quarter. Tennessee-based Brookdale also offers home health, hospice and outpatient therapy services.
New York-based Glenview Capital Management is the company’s largest shareholder with a stake of around 10 percent as of late December, followed by Vanguard Group and Dimensional Fund Advisors. Morgan Stanley is also an investor.
Chinese Investors Bet on US Senior Homes
Fosun International is not the first Chinese conglomerate venturing into the North American senior living market. In November 2016, mainland private equity firm Cindat Capital Management acquired a portfolio of senior housing and long-term/post-acute care facilities from Ohio-based Welltower for $930 million.
The Cindat deal was followed in the same month by Taikang Life Insurance purchasing a $1 billion stake in US-based NorthStar Realty Finance, which had a portfolio of 461 healthcare properties in the US and UK. Two weeks later, rival Chinese institution Anbang Insurance was reported to be eyeing a C$1 billion ($744 million) stake in Canadian retirement home operator Retirement Concepts. The Canadian government approved the deal the following year.
Fosun Says Its Overseas Deals Are Above Board
Hong Kong-listed Fosun International is continuing to make high-profile overseas acquisitions at a time when many of its Chinese rivals have seen their deal flows cut off, and the company seems destined for more cross-border wins. After picking up a majority stake in French luxury fashion brand Lanvin for €120 million ($148 million) late last month, Fosun’s chairman Guo Guangchang said in an interview with Financial Times that the group would target more investments abroad, especially in the healthcare, education, fashion and tourism sectors.
“Our overseas investments are approved by the Chinese government and the local governments, not just in Europe but globally. We are very transparent,” Guo said in the interview. “The Chinese government is very law oriented so they support the companies who respect the law.”
A week after the acquisition of Lanvin, Fosun bought a controlling stake in Austrian luxury textiles maker Wolford for €33 million ($40 million). The conglomerate also purchased Brazilian asset manager Guide Investimentos for $52 million in the same week.
Cross-Border Rivals Flounder
While Fosun’s overseas appetite resembles that of Anbang Insurance, the Shanghai-based investor is enjoying smoother sailing than Anbang, which was taken over by China’s insurance regulator last month as its boss Wu Xiaohui was indicted for “economic crimes.”
HNA Group is another formerly acquisitive group that has struggled where Fosun thrives. The airline-to-property conglomerate chaired by Chen Feng has disposed of $5.5 billion worth of assets since the start of 2018, as it scrambles to pay off an estimated $100 billion in debt.
Like HNA Group and Anbang, Fosun is a non-state-owned conglomerate. Founded in 1992 by four graduates of Shanghai’s Fudan University, the firm that got its start in property development and medicine has evolved into one of China’s largest private conglomerates. Fosun has amassed RMB 500 billion ($79 billion) in assets as of mid-2017, its corporate website shows.