The Abu Dhabi Investment Authority (ADIA) and Malaysia’s Employees Provident Fund have backed the MYR5.7 billion (US$1.2 billion) takeover of southeast Asian hospital operator Ramsay Sime Darby Healthcare by private equity firm TPG and Hong Leong Group.
RSDH operates seven hospitals in Malaysia and Indonesia and will be placed under the Columbia Asia Healthcare umbrella, which already includes 22 medical facilities in the region. Following the transaction, ADIA and EPF will have a combined shareholding of around 25% in One Health Holdings, the unit that owns Columbia Asia. Sime Darby is divesting to focus on its core industrials and trading businesses.
The acquisition is the biggest conducted by ADIA in the healthcare, life sciences and pharma sectors since it participated in the US$1.6 billion takeover and recapitalization of US-based veterinary company Amerivet in March 2022, alongside AEA Investors. The other big transaction by ADIA last year was its purchase of a 3% stake in India-based Intas Pharmaceuticals for INR20 billion (US$250 million) from Singapore’s Temasek.
In the emerging market healthcare sector, India has sucked in the lion’s share of sovereign investor capital, while southeast Asia has received less attention. Singapore’s sovereign wealth fund GIC has been the most active in the region. In 2021 it invested MYR750 million (US$180 million) in Sunway Berhad’s healthcare business, in return for a 16% stake via GIC subsidiary Greenwood Capital. The investment proved to be a good bet as Malaysia’s economy opened up following the pandemic with Sunway Healthcare Group’s annual revenue increasing by 30% in FY 2022, surpassing the MYR1 billion milestone for the first time.
Globally sovereign investors are stepping up investment in healthcare this year. In the year to date, sovereign investment in the sector has risen above US$7 billion, which is approaching the US$7.9 billion estimated for 2022. Investment hit a peak of US$14.7 billion in 2021 as sovereign wealth funds sought to take advantage of disruption generated by the pandemic.
There has been a noticeable shift towards emerging markets this year, which have absorbed two-thirds of sovereign investment in healthcare – more than double the proportion compared to the previous year. Over the same period, the proportion of investments in Europe more than halved from 55% to 23%. India has made up a large proportion of emerging market investment, particularly Temasek’s involvement in Manipal Hospitals. The growth reflects the increasingly complex needs of growing and ageing populations providing opportunities for long-term investments.