SIN Capital investors aggrieved as their fate remains cloudy in RRJ’s buyout of Fullerton Health

WITH a major buyout deal of troubled Fullerton Healthcare Corp (Fullerton Health) by white knight RRJ Capital merely days away from closing, some indirect investors of SIN Capital — a firm that majority-owns the healthcare firm and is led by Singaporean David Sin — are feeling angsty as they remain in the dark over the fate of their investments.

The Business Times (BT) understands that these investors had a couple of years ago formed groups to attempt to recoup their investments from SIN Capital; they have collectively invested S$10 million to S$30 million (maybe, even more) in several of SIN Capital’s British Virgin Islands (BVI) companies, called Oceanfront Investments.

SIN Capital was founded by Sin, who is currently Fullerton Health’s co-founder, group president and deputy chairman. He is set to exit the firm as a shareholder and relinquish these posts once the buyout is a done deal.

“We are sitting ducks in a pond of no water,” lamented one investor when contacted by BT.

Many of these investors had ploughed funds into SIN Capital’s BVI vehicles back in 2015, as Fullerton Health was preparing for an initial public offering (IPO) on the Singapore Exchange, in the hope of getting their investments converted into shares in the listed company. But nothing happened, as the highly-publicised IPO exercise was shelved amid controversy sparked by anonymous complaints to the regulators over its business practices.

BT understands that the investors had then held out for a trade sale of up to 100 per cent of Fullerton Health last year to receive their share of the net proceeds, but this deal also fell through.

A bitter “Mexican stand-off” last year among 3 co-founders and shareholders of Fullerton Health (Sin and former pals and doctor-colleagues Michael Tan and Daniel Chan) had derailed the sale, even as liquidity woes mounted for the ailing healthcare firm.

The feud turned litigious. Sin sued the duo for standing in the way of the sale. Court documents revealed that Dr Tan and Dr Chan did not wish to sell their minority shares in the firm and were intent on staying on as directors and shareholders. In January this year, the medical doctors filed a petition with the Grand Courts of Cayman Islands to wind up Fullerton Health.  

“When 2 elephants fight, it is the grass that suffers. That’s what happened... we are the grass,” said an investor of Oceanfront Investments. More than 10 such vehicles are called Oceanfront Investments under SIN Capital, and sources say that many of them have investors who now feel as if they have been left in the lurch.

It is further believed that the unhappy investors have issued letters of demand to SIN Capital to get their monies back, but according to one investor, “nothing has happened”.

All that bickering among the firm’s key individuals could be ending soon.

Last week, Fullerton Health said it had reached a definitive settlement pact with Dr Tan and Dr Chan, and that the doctors have withdrawn their winding-up petition on the firm. They will also step down from Fullerton Health’s board and their positions in the firm and its related companies across all countries.  

More significantly, the long, winding and often acrimonious road to lift Fullerton Health’s waning fortunes may finally see some light, as the settlement also paves the way for the healthcare provider to complete a merger proposed by RRJ, a Hong Kong-based private equity fund and Fullerton Health’s largest creditor.

The merger, approved by 85.8 per cent of shareholders on May 5, involves a much-needed cash injection of S$350 million by RRJ and a loan arrangement, as well as a new corporate structure.

It is noteworthy that RRJ was co-founded and led by Malaysian brothers and the region’s prominent dealmakers Richard and Charles Ong. Richard Ong, who is chairman and chief executive of RRJ Capital, also sits on the board of Fullerton Health as a non-executive director.

When contacted for more details, Fullerton Health told BT that the merger involves “some moving parts” and is expected to be completed in the coming weeks.

Fullerton Health added: “The merger is essentially a buyout by RRJ. It is a formal process under Cayman law, which allows the buyout of all direct shareholders if the majority vote in favour. Once it is completed, RRJ will be the majority shareholder and the co-founders will step away from the company.”

In other words, all 3 co-founders long associated with Fullerton Health are set to sever all ties with the firm. The trio are Sin, who used to be credited for transforming the firm from a Singapore-centric entity to a pan-Asian platform until it fell under financial strain in recent years, as well as Dr Tan and Dr Chan. “The good news is that we will be able to move forward and focus on building the business. We will also be able to better work with our partners and creditors, who have till now been very supportive and understanding,” said Fullerton Health.

But for SIN Capital’s aggrieved investors, who are not direct participants in the merger as they are not shareholders of Fullerton Health, their fate remains cloudy.

In response to BT queries about the matter, Fullerton Health replied: “Fullerton Health as a company, and only deals with its direct shareholders. 

“David Sin invested directly and through some companies which he controls.  If investors invested in those David Sin companies, they have to deal with David Sin. The company has no obligation, and more importantly, no power or jurisdiction to deal with these investors. Whatever arrangements these investors have with David Sin, the company is not privy to the same.”

One source in the know said: “SIN Capital will work with the Oceanfront investors towards an appropriate resolution, along with Dr Tan and Dr Chan, who brought in many of these investors.”

The affected SIN Capital’s investors could be in for a longer wait.