Sime Darby Berhad : 15 May 2015 - Ramsay Sime Darby Health Care Signs Conditional Contract to Form A Joint Venture In China

( Mr Bronte Kumm Group CEO of Ramsay Sime Darby Health Care exchanging document with Madam Yulan Fan, Chairman of Chengdu Jinxin Healthcare Investment Management Group Ltd in the presence of the representatives from Ramsay, Sime Darby and Jinxin Group)

Ramsay Sime Darby Health Care (RSDHC), a partnership between Ramsay Health Care Ltd and Sime Darby Berhad, has today signed a conditional contract to form a joint venture with Chinese healthcare company Chengdu Jinxin Healthcare Investment Management Group Ltd (Jinxin), which operates a number of hospitals, and is in the process of developing a new hospital, in the city of Chengdu.

Ramsay Sime Darby Health Care will have an effective 50% stake in the final 50-50 joint venture and is expected to be the first international hospital operator to invest across a broad spectrum of specialty facilities in the Chinese hospital market.

Chengdu is home to over 14 million people and is the capital and centre of commerce and trade of the Sichuan Province in western China. Sichuan has a population of approximately 85 million and is enjoying rapid economic growth.

The joint venture will initially involve four of the hospitals that Jinxin currently operates in Chengdu and, at a later stage, a 500 bed women's health private hospital due to open later this year. In total, it is contemplated that the joint venture will involve these five hospitals with approximately 2,300 beds and a focus on women's health, mental health, and traditional Chinese medicine.

The RSDHC joint venture was formed on 1 July 2013 and currently operates three hospitals in Malaysia and three hospitals in Indonesia. It also operates a nursing and health sciences college.

Ramsay Managing Director Chris Rex said the joint venture with Jinxin was an excellent entry point for Ramsay Sime Darby into the Chinese healthcare market and the largest economy in Asia.

"China has a large and ageing population with a burgeoning middle class and more recently, has developed a positive outlook on healthcare reforms," Mr Rex said.

"We look forward to applying our proven healthcare management expertise to the Jinxin hospitals in Chengdu and to exploring future opportunities that may arise both in the Sichuan province and elsewhere in China."

Sime Darby Berhad President and Group Chief Executive Tan Sri Dato' Seri Mohd Bakke Salleh said the partnership with Jinxin was a good start for Ramsay Sime Darby as it sought to build a portfolio of quality hospitals across Asia.

"Both partners - Ramsay and Sime Darby - have been keen to expand our hospital portfolio in Asia and this new deal with Jinxin, a reputable hospital operator, provides Ramsay Sime Darby with a foothold in a very attractive market and allows it to accelerate our growth plans in the region," Tan Sri Bakke said.

The total cash consideration for Ramsay Sime Darby's 50% equity share of the joint venture will be approximately USD1135 million (RM2431 million) and will be funded through Ramsay Sime Darby's existing debt facility.

The total consideration will be paid by Ramsay Sime Darby to Jinxin in two phases. The first phase of the transaction relates to the four hospitals that Jinxin currently operates. The second phase of the transaction relates to the new women's health private hospital, which is currently being developed. The two phases of the transaction are not inter-conditional.

Given that the deal is subject to the parties satisfying all conditions precedent, a timeframe for final completion of each phase of the transaction has not yet been established but it is envisaged that both phases will be completed before the end of FY16.

1USD= United States Dollars
2RM= Malaysian Ringgit