The Covid-19 pandemic has prompted a massive shift in capital towards healthcare, with this week seeing Singaporean sovereign wealth fund GIC invest US$180 million in the healthcare business of Malaysia’s Sunway.

GIC acquired a 16% stake in Sunway Healthcare, which owns and operates two tertiary hospitals with combined capacity of over 800 beds and plans to build up to six more hospitals, according to Reuters. With GIC backing, the company plans to increase capacity to approximately 3,000 beds by 2025, with an IPO in 2027-29.

Global SWF data indicates that this latest transaction has raised total investment by state-owned investors in healthcare to approximately US$7.4 billion in the year-to-date. Much of this has been in venture capital in startups oriented towards vaccinations and therapeutic drugs that have witnessed a surge in interest following the pandemic - GIC's Singaporean stablemate Temasek has led VC investment by state-owned investors in biotech.

However, GIC’s latest investment is in the physical infrastructure of healthcare provision – hospitals. This offers a different aspect in that there is a reliable return, although fewer risks. Earlier this month, GIC invested alongside Abu Dhabi's ADIA and a consortium of Blackstone, Carlyle and Hellman & Friedman to buy a majority stake in medical supplier Medline Industries. Medline is one of the largest privately-held manufacturers and distributors of medicals supplies such as surgical equipment, gloves, and laboratory devices used by hospitals around the world, according to Reuters.

Other state-owned investors are also acquiring stakes in hospital chains. Earlier this month, Abu Dhabi's Mubadala agreed to buy a 60% stake in UEMedical as it expands its portfolio of healthcare assets beyond the UAE. Through the transaction, Mubadala Health will add to its portfolio Danat Al Emarat Hospital for Women & Children, the HealthPlus Network of Specialty Centres, HealthPlus Fertility (the largest IVF provider in the region), and Moorfields Eye Hospital Abu Dhabi, according to The National. The company will also get a stake in Al Meswak Dental Group – the largest dental and dermatology network in Saudi Arabia

India's quasi-SWF the National Investment and Infrastructure Fund (NIIF) invested US$273 million in Manipul Hospitals in March, helping to support the group's purchase of Columbia Asia Hospitals, Manipal Hospitals is already backed by Singaporean state-owned investor Temasek, which acquired an 18% stake in 2017.

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