CHA to invest S$50m in SMG, increasing stake to 24%

CHA Healthcare Singapore has entered into a share purchase agreement to invest S$50 million in Catalist-listed Singapore Medical Group (SMG), increasing its stake from 6.86 per cent to 24.13 per cent, SMG announced in a filing to the Singapore Exchange on Wednesday.

CHA, an international subsidiary of Korean healthcare group CHA Health Systems, has agreed to purchase 83 million vendor shares at S$0.605 apiece, or a premium of 34.5 per cent to SMG's closing price of S$0.4498 on Tuesday. Upon completion of the share purchase within three months of the agreement date, CHA will become SMG's controlling shareholder.

It is also extending a convertible loan of S$10 million to SMG, which will result in the issue of 23.6 million new shares if converted in full. SMG will use proceeds from the issuance of the convertible loan to further pursue earnings-accretive organic and inorganic opportunities across the region, SMG said.

"With CHA's reputation for world-class fertility treatments and advances in reproductive medicine, our strengthened collaboration is intended to propel the group further up the value chain with the most technologically advanced and comprehensive suite of services in the world," said SMG CEO and executive director Beng Teck Liang.

"The benefits from our strong relationship were already clear from our past endeavours together. I believe that our strengthened relationship will provide boundless new opportunities as we are able to reap cross-border synergies through the creation of technological knowledge share of best practices while gaining access to a patient referral network that extends across the entire Pacific Rim."

Keyong Wook Yoon, CEO of CHA Healthcare Singapore, said: "With CHA's combined women's health and IVF network spanning the US, North Asia and our joint venture with SMG in Oceania, along with the ramp-up of our investment in SMG, this latest investment represents our strong conviction to benefit from SMG's ability to expediently tap new markets and thrive. We currently have advanced plans to drive a number of exciting initiatives around the world together and wholly welcome the opportunity to work constructively with SMG."

Shares of SMG closed up two Singapore cents or 4.4 per cent to S$0.47 on Wednesday after the announcement.