(WSJ) Chinese hospital-investment firm Zhuhai Blue Ocean Strategy Medical Co. plans to raise about US$1 billion in a Hong Kong initial public offering in the third quarter, people familiar with the situation said, making it the latest company to tap into rising demand for better health care among China’s growing middle class.
The Guangdong province-based hospital operator and investor plans to submit an application for listing approval to Hong Kong’s stock exchange in June, the people said. In Hong Kong, companies that want to list need to get approval from the city’s stock exchange before going public. If it lists this year, it will add to the billions of dollars expected to be raised in Hong Kong IPOs this year by Chinese companies, including brokerage HTSC and Chinese conglomerate Legend Holdings Corp.
Zhuhai Blue Ocean has hired Goldman Sachs Group Inc. and China International Capital Corp. to handle the listing, the people said.
Zhuhai Blue Ocean couldn’t be immediately reached for comment.
Founded in 2010, the private company provides hospital management services and has formed business partnerships with over 300 hospitals across 200 cities including Beijing, Guangdong and Chongqing, according to its website.
Zhuhai Blue’s listing comes amid an increasing push by Beijing to have more private investors participate in improving medical services in China, which is struggling to cope with a population that is both urbanizing and aging.
China’s private-hospital market is still at an early stage compared with those of developed countries such as the U.S., where insurance coverage is more advanced. Beijing aims to increase the proportion of beds in private hospitals to 20% of the total in 2015 from only 13% in 2010.
Private hospital revenues in China could grow at a compound annual growth rate of 20% to reach 252 billion yuan ($40.6 billion) in 2017 from 121 billion yuan in 2013, according to estimates from the consulting firm Frost & Sullivan.
Such forecasts are already driving foreign investor interest in China’s healthcare system. Shanghai Fosun Pharmaceutical Group Co. , a drugmaker owned by Shanghai’s Fosun conglomerate, and private equity firm TPG Capitalbought Chindex International Inc., which provides healthcare services in China through the United Family Healthcare network, for around $400 million last year.
Phoenix Healthcare Group Co, which owns 12 hospitals in China, raised US$220 million in a Hong Kong IPO in November 2013. The company said earlier this year that it had a goal of adding more than 6,500 beds in the next two to three years, from the current 3,390. Its shares have nearly doubled since they listed.
Source: Wall Street Journal by Yvonne Lee and Prucence Ho
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