Healthcare is sector least affected by geopolitical tensions, say CBC Group and GHO Capital after US$21 billion merger

[SINGAPORE] Healthcare is a global business, and reflecting that belief is the merger of specialist healthcare asset managers CBC Group and GHO Capital, said Fu Wei, CEO of Singapore-headquartered CBC.

The combination took more than 18 months and five meetings to discuss both sides’ opportunities and capabilities. Their aim was to achieve more together than what each could do alone.

“By bringing the two firms together, we are creating the largest dedicated healthcare investment manager in the world, with US$21 billion in (assets under management) and deep expertise across the major healthcare markets,” GHO managing partner Mike Mortimer told The Business Times.

Fu and Mortimer will be co-CEOs of the combined entity, which is set to have a presence in the three large healthcare markets of Asia, the US and Europe.

Both firms operate in the US, with CBC also having deep roots in Asia. GHO, which is based in London, has a European footprint as well.

The merger was announced in May and is expected to be completed some time next year.

“The combined asset management firm is in a different league compared to our specialist healthcare peers (which) are all regional, with none having a global presence,” noted Fu.

He also highlighted that the healthcare sector is minimally affected by geopolitical tensions due to its universal nature.

“You can’t prevent any nation from curing cancer, and this is not national security,” he said. “Within this sector, we believe that having a global presence can be more impactful.”

There is no cannibalisation resulting from this merger, he added, as the two firms’ focuses are different despite being in the same sector.

CBC’s ecosystem spans biotech products and royalties, while GHO’s focal point is healthcare services. Their geographical scopes differ as well.

“The combination leverages complementary investment strategies... to capitalise on high-growth, innovation-led opportunities across the largest healthcare markets,” said Mortimer.

This allows the asset managers “to continue to deliver better, faster, more accessible healthcare".

The growth trajectory will also allow them to offer their staff more opportunities, making it easier to retain talent, said Fu.

“Growth is always the most important key to solve... issues within any institution, the biggest challenge being the status quo,” he added.

He also noted that going global will attract deals, talents and resources, and he believes the combined entity will be able to explore possibilities that were previously not possible for a single firm.

The immediate priority is for each side to continue its existing strategies.

There are plans to build a global programme for healthcare opportunities, tapping into the three major markets for R&D and talent, as well as bringing products and services from one market to the others, when the merger is completed.

Fu said the challenges that will arise from the combination will be dwarfed by the opportunities, and will be manageable.

Both companies have an inclusive culture, with the merger bringing together about 200 professionals across North America, Europe and the Asia-Pacific.

At CBC, the employees span 10 different nationalities. “The development of this kind of inclusive culture and mentality makes the combination much easier, as embracing new talents and culture has always been the DNA for both firms,” said Fu.

Considering the healthcare sector’s high entry barrier, Fu thinks specialist asset managers such as CBC and GHO will perform better than generalist ones.

There is a need to understand the science and products, plus setting up a global specialist healthcare asset manager will attract more investor attention.

“Our key stakeholders can benefit from this upcoming combination, where one plus one will be even bigger than two or three,” said Fu.