Son Kiat Lim takes lead in increasing abroad as Singapore-based healthcare firm seeks to take over Vietnam’s FV Hospital.
A deal by subsequent technology scion Kiat Lim guarantees to be transformative for the household’s Thomson Medical Group—increasing it from Singapore and Malaysia right into a extra regional firm. In July, the corporate introduced it will purchase Vietnamese hospital operator Far East Medical Vietnam for as much as $381 million. The deal, if it goes via, could be the largest healthcare acquisition in Southeast Asia since 2020.
The Vietnamese firm has a spread of services together with FV Hospital in Ho Chi Minh, a 200-bed hospital that gives 30 medical specialty companies reminiscent of oncology, cardiology and ophthalmology. It serves sufferers from each Vietnam and Cambodia, and posted a 65% year-on-year leap in web revenue final yr to S$16 million ($12 million).
Thomson is shopping for the privately held firm from Quadria Capital, a Singapore-based personal fairness agency, and French medical doctors led by FV Hospital founder and CEO Jean-Marcel Guillon. The proposed deal was sealed with Guillon within the Singapore workplace of RSP Architects Planners and Engineers, which is owned by the Lim household. “We shook palms over hen rice,” says Lim, 30.
Lim says the deliberate acquisition would give Thomson what it has been searching for—a method to develop considerably in considered one of Southeast Asia’s quickest rising economies and healthcare markets. And Lim developed good rapport with FV Hospital’s Guillon, who agreed to remain on for a couple of years after the deal closes. Lim is assured FV Hospital might be a part of Thomson Medical from the beginning of 2024. “Barring unexpected circumstances, we’re properly on monitor to finish the deal by the top of this yr,” he says by electronic mail.
The introduced acquisition permits Lim to comply with within the dealmaking footsteps of his billionaire father Peter Lim—a former stockbroker who parlayed a $1.5 billion windfall from a stake in palm oil large Wilmar right into a multibillion greenback portfolio with pursuits in schooling, healthcare, actual property and sports activities, together with Spanish soccer staff Valencia CF. The elder Lim purchased Thomson Medical Centre, a Singapore specialist maternity and pediatric hospital for about $396 million in 2011 and expanded into Malaysia in the identical yr with the acquisition of a stake in Kuala Lumpur-based TMC Life Sciences. In September 2022, the youthful Lim took the helm as government vice chairman of the listed healthcare firm—now renamed Thomson Medical Group.
An artist’s rendering of FV Hospital complicated, which incorporates the seven-story medical tower that’s at present beneath building and anticipated to be accomplished by 2025.
Courtesy of FV Hospital
Now come the a number of steps to shut the deal. One in all them was getting shareholder approval. The Lim household holds a 90% stake in Thomson Medical, and approval got here in September with a 99.99% sure vote. Vietnamese authorities should additionally give clearance on the deal, and are at present reviewing it (no phrase but on when a choice might be made).
Getting the funding in place to finish the deal can also be on the desk. At about S$517 million, the acquisition represents about one-third of the present market capitalization of the corporate, S$1.5 billion as of early October—in different phrases, it’s an enormous mouthful of a deal to swallow. In its press launch in July, the corporate stated the acquisition could be financed with “inside assets and exterior borrowings.”
Saurabh Gupta, Singapore-based managing director and head of funding banking and advisory for Maybank Securities, which suggested Thomson Medical on the deal, says all is so as. In an electronic mail that didn’t give extra particulars, he says “all of the financing required to shut the transaction is in place.” Lim additionally says by electronic mail that the financing has “already been secured.”
“We will’t watch for stars to align, so once we noticed this chance, we needed to go for it.”
The corporate hasn’t but publicly introduced which financial institution (or banks) will organize the financing, not to mention the phrases, and credit score analysts are eager to see how will probably be structured. In a round to shareholders in September, Thomson Medical stated it’s going to pay for FV Hospital with a mix of money—it had about S$287 million on its steadiness sheet as of 30 June 2023—and borrowings. It has already raised S$150 million from the sale of five-year notes with a coupon price of 5.5% in Could and July beneath its S$1 billion multicurrency debt issuance program.
If Thomson Medical makes use of all its money plus the S$150 million from the current bond subject for the Vietnam buy, it will solely have to borrow about S$80 million, so the corporate wouldn’t enormously improve its debt at a time rates of interest are excessive. But it surely’s extremely unlikely all of the money could be deployed.
Already, Thomson Medical has vital debt. Within the yr that led to June, gross borrowings elevated to S$748 million from S$629 million. One issue was an growth of mattress rely in Kuala Lumpur to 554 from 254. Singapore-based credit score analyst Wong Di Ming of iFAST Monetary says that Thomson Medical’s proposed Vietnam acquisition may stretch the corporate’s funds within the brief time period. In accordance with Bloomberg information, it has one of many highest gearing ratios among the many greatest publicly listed hospital operators (by market cap) in Southeast Asia.
Getting Leverage
Thomson Medical is considered one of Southeast Asia’s most leveraged hospital operators.
Lim downplays issues over the corporate’s debt, stressing that the acquisition ought to increase earnings and that the group’s money circulation ought to help its initiatives. “We will’t watch for stars to align, so once we noticed this chance, we needed to go for it,” Lim says, including the potential progress of FV Hospital is big, significantly as soon as the development of a seven-story medical tower is accomplished by 2025. The tower will home superior oncology services and a bone marrow transplant unit, together with new specialist care companies reminiscent of dialysis remedy and in vitro fertilization.
Thomson Medical shares have fallen about 10% because the Vietnam deal was introduced in July amid issues over its rising debt burden amid excessive rates of interest, although a few of that may very well be defined by the final weak spot of fairness markets. Traders are additionally awaiting how the corporate will restore its free float after shares held by minority shareholders fell to 9.98% in September. The Singapore Change gave the corporate till Dec. 10 to extend the free float above the required 10% threshold.
If the deal had been carried out within the yr ended June 2022, Thomson Medical estimates contributions from Vietnam would have boosted firm income by 33% to S$444 million (on a proforma foundation), with FV Hospital accounting for 25% of the entire, greater than Malaysia’s 18%, and never removed from half of Singapore’s 57% contribution.
Scaling Up
Thomson Medical has seen a powerful restoration since posting a hefty loss through the pandemic.
Ewan Davis, head of Southeast Asia at Quadria Capital, agrees FV Hospital has vital progress prospects. “If we didn’t have the necessity to return capital to our buyers, we’d love to stay invested,” he says. (Personal fairness funds usually exit inside 5 years and return capital to their buyers). Within the area, Davis says, “there’s going to be a sustainable progress for the healthcare sector for the following twenty years.”
Serendipity helped Lim discover the deal. “We had been truly different hospitals in Vietnam, however individuals in these hospitals saved speaking about FV Hospital so we determined to take a look at FV Hospital,” Lim recollects. It was the appropriate second: Quadria Capital, FV Hospital’s controlling shareholder, was already pitching the sale of the asset to about 20 potential consumers when Thomson Medical made identified its curiosity.
The approaching-together of FV Hospital and Thomson Medical Group is the beginning of a long-term journey to take FV Hospital to the following stage of improvement in Vietnam, says Guillon by textual content. “It’s so necessary to us to get this proper, that’s why I’m staying on with my administration staff to speculate on this relationship,” he provides. “We’ve an awesome chemistry with the Thomson staff, which units the appropriate basis for us to construct larger and higher issues.”
Kiat can also be a board director of Spanish soccer staff Valencia CF.
Munster Cheong for Forbes Asia
Lim didn’t begin in healthcare. Since graduating from the College of New South Wales in Sydney in 2017, Lim has labored in varied roles in his father’s companies. In Sydney, he began learning finance however quickly shifted to psychology, to assist him domesticate relationships which might be essential to constructing and managing the household’s ventures. “We will all the time get another person to crunch the numbers however the stuff I discovered in psychology turns out to be useful when negotiating offers,” Lim says.
Successful the bid for FV Hospital was a coup for Lim and his colleague Melvin Heng, who joined Thomson Medical as group CEO in December 2022 from rival Gleneagles Hospital, one of many 4 hospitals owned by Malaysia’s IHH Healthcare in Singapore. The duo began scouring alternatives in Vietnam, considered by Lim—from journeys to Vietnam to see initiatives RSP was doing there—as a vibrant financial system.
Lim expects Vietnam to turn out to be Thomson Medical’s third pillar of progress, permitting the group to extend its attain and scale because it continues to develop present operations. TMC Life Sciences is helmed by Nadiah Wan, who was a member of Forbes Asia’s 2021 Asia’s Energy Businesswomen listing. Led by Wan, the corporate has been increasing its hospital in Kuala Lumpur in recent times and has plans later to construct an built-in medical hub, together with coaching services and housing for medical workers, on a 9.2-hectare website within the Iskandar area, simply north of Singapore.
Whereas TMC purchased the property eight years in the past, building hasn’t began and Lim says the corporate is reviewing the venture post-pandemic. The group goals to finish the Iskandar hospital inside two years of when a fast rail system linking Malaysia’s Johor Bahru to Singapore is accomplished, whereas on the similar time alternatives in different Southeast Asian nations. “We proceed to be targeted on the group’s growth and progress, so our methods might be aligned to maximise worth creation for the group,” says Lim.
Peter Lim (left) and son, Kiat.
Courtesy of Thomson Medical group
In the long run, Thomson Medical ought to profit from booming demand for medical companies as populations grow old and turn out to be extra prosperous throughout the area, in line with Alex Boulton, Singapore-based head of healthcare and life sciences in Southeast Asia at consultancy Bain. “Hospitals are a kind of sectors that may actually perpetuate itself,” he says. Two months after Thomson Medical introduced the acquisition of FV Hospital, Raffles Medical—managed by Singapore tycoon Bathroom Choon Yong—agreed to purchase a majority stake in American Worldwide Hospital, a smaller hospital in Ho Chi Minh Metropolis valued at $46 million.
Peter Lim is assured his heir-apparent will do what it takes to rework the corporate right into a pan-Asian healthcare group. “Kiat works laborious and hopefully has the aptitude to make issues occur going ahead,” the daddy, 70, says by electronic mail. “He advantages now from nonetheless with the ability to draw on my expertise.” The elder Lim has an estimated web price of $2 billion, rating No. 23 on the listing of Singapore’s 50 Richest.
Conscious that he has huge footwear to fill, Kiat doesn’t let his father’s accomplishments put pointless strain on him to ship comparable returns. “I can’t put that very related expectation on myself,” Lim says. “In any other case, I’ll go loopy.” With laborious work and the appropriate technique, Lim hopes Thomson Medical’s market cap may double to about S$3 billion within the subsequent 5 years. “If it’s not not less than that [market cap], I can’t be pleased with myself.”
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