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Acromec inks deal to own, lease out fertility medical centre in Novena

CATALIST-LISTED specialist engineering firm Acromec has entered into a non-binding letter of intent (LOI) for a proposed collaboration on a private fertility medical centre, it said in an exchange filing on Thursday morning.

The centre is located in Singapore, within Novena’s medical belt, Acromec’s chief financial officer, Jerry Tan, told The Business Times.

Acromec entered into the LOI on Monday with two fertility medicine specialists who will lead the core management team, as well as with a US-based fertility clinic as strategic investor and adviser.

The two individuals are a senior consultant obstetrician and gynaecologist, who will serve as medical director of the centre, and a clinical embryologist who will serve as IVF (in vitro fertilisation) laboratory director.

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Acromec intends to acquire the assets required for the operation of the centre – such as the premises and equipment – from one of its former customers. The customer was recently placed under judicial management by Acromec for debt recovery and restructuring purposes.

Acromec said it is familiar with these assets because it designed, put in place and out-fitted them.

After they are acquired, the assets will be leased to the Management Co, a special purpose vehicle to be incorporated to manage and lead the fertility centre.Acromec said that leasing the assets will contribute an additional revenue stream.

“We will bring our expertise in the designing and building of IVF facilities, and team up with people who have experience in operating them,” Mr Tan told BT on Thursday.

Acromec designs and constructs facilities requiring controlled environments, including IVF and day surgery facilities. It mainly serves the healthcare, pharmaceutical, biomedical science, research and academia, and electronics sectors.

Mr Tan added that the US fertility clinic, which will come in as a strategic investor and adviser for the Singapore centre, has been running similar operations on a larger scale, and is keen to explore opportunities in the Asian region including Singapore.

Acromec intends to support any future expansion plans the partners have by offering its expertise in the design and construction of fertility medical facilities, he said.

“We’re also roping in renowned specialists to be the backbone of the Singapore centre, and when the opportunities arises we will expand our cooperation to other doctors in the future,” he noted.

The LOI will lapse one year after June 3 unless renewed or earlier terminated.

Lim Say Chin, executive chairman and managing director of Acromec, said the proposed collaboration is an opportunity to participate in the growth of the regional fertility business.

Acromec’s board believes that the proposed collaboration presents a strategic opportunity for the group to raise its core engineering services business to the “next higher value-add level”.

Beyond the provision of mainly engineering services, the group is also working towards a turnkey model where it can source for the funding, design, build and outfit of the medical facilities, to lease out or self-operate upon completion.

In the current instance, the proposed collaboration for the fertility centre can “potentially realise greater value” for the centre’s assets as compared to liquidating and disposing the assets to third parties, Acromec said.

Separately, the company announced two weeks ago that its 80 per cent-owned unit Acropower will build, own and operate a waste-to-energy power plant at Chew’s Agriculture’s new poultry farm under a 15-year agreement.

The power plant is meant to boost recurring income and diversify its business into renewable energy, Acromec said on May 21.

Shares of Acromec were trading down 0.2 Singapore cent or 2.151 per cent at 9.1 cents as at 3pm on Thursday.