OUELH expands into Myanmar healthcare with US$19.5m acquisition

OUE Lippo Healthcare (OUELH) is venturing into Myanmar with stake acquisitions in two joint venture companies that own three hospitals, one medical centre and two clinics. This will give the company presence in the key cities of Yangon, Mandalay and Taunggyi, the subsidiary company of OUE Limited said on Thursday.

OUELH's wholly owned units have signed a sale and purchase agreement with Waluya Graha Loka to acquire a 40 per cent stake in Yoma Siloam Hospital Pun Hlaing Limited (YSHPH), and a 35 per cent stake in Pun Hlaing International Hospital Limited (PHIH), for US$19.5 million in all.

The vendor is considered an associate of Stephen Riady, the non-independent, non-executive director of OUE Lippo Healthcare. It is also an indirect wholly owned subsidiary of property company Lippo Karawaci.

Both YSHPH and PHIH are joint venture companies with First Myanmar Investment (FMI), which is part of the enlarged Yoma Group that also comprises SGX-listed Yoma Strategic. FMI, which has businesses in real estate, health care, financial services, and tourism, is also the first company listed on the Yangon Stock Exchange.

The consideration is intended to be fully funded by the net proceeds from the placement of 562.5 million shares to Browny Healthcare completed in February 2018. Some S$41.5 million from the placement has not been used yet.

Upon completion of the acquisition, OUELH will be the joint venture partner of FMI in the management and operation of the healthcare portfolio currently operated by YSHPH.

PHIH owns and holds the leases of the land and properties on which the medical facilities are located, with back-to-back leases.

The three hospitals, with a total bed capacity of about 370 beds, are located in Yangon, Mandalay and Taunggyi. The flagship hospital in Yangon was the first hospital in Myanmar to receive the prestigious JCI accreditation in 2017, OUELH said.

The hospitals provide services such as emergency, out-patient, in-patient, laboratory, imaging, physiotherapy, medical check-up, and overseas clinical services, across practices including cardiology, orthopaedics, obstetrics and gynaecology.

Lee Yi Shyan, chairman of OUELH said: "Entry into Myanmar is an integral part of our strategy to grow into a pan-Asia healthcare network. With the acquisition, we are well-positioned to provide affordable quality health care to meet the rising demand in one of the fastest growing emerging economies."

OUELH will be seeking the approval of its shareholders for the transaction at an extraordinary general meeting (EGM) to be convened. Itochu Corporation, through Browny Healthcare, has given an irrevocable undertaking to vote in favour of the transaction at the EGM. Browny Healthcare has a 25.32 per cent stake in OUELH.

In Myanmar, healthcare spending increased from US$279 million in 2012 to US$789 million in 2018, and the government plans to implement large-scale reforms such as the provision of universal healthcare coverage by 2030.

Shares of OUELH stayed flat at S$0.068 on Thursday, while those of OUE added one cent to finish at S$1.47.