Quality HealthCare’s Hong Kong arm is up for sale, say sources

Hong Kong's leading private clinic operator Quality HealthCare is now attracting dozens of global private equity funds for an acquisition

PUBLISHED : Wednesday, 07 August, 2013, 9:16am
UPDATED : Thursday, 29 August, 2013, 4:13am

Global private equity giants, including TPG and Carlyle, are joining the bidding for Quality HealthCare Medical Services (QHMS), a Hong Kong-based private clinic operator owned by two of India’s richest businessmen, Malvinder Mohan Singh and Shivinder Mohan Singh, sources said.

Fortis Global Healthcare, an Asian-based healthcare operator which is also controlled by the Singh brothers, recently hired an investment bank to approach private equity funds about a sale of QHMS, which it bought from Quality HealthCare Asia Ltd in 2010 for about HK$1.5 billion, said the sources familiar with the matter.

Even though QHMS had only enjoyed single digit business growth in the past three years, the owners expected bidders for the Hong Kong-based medical group to pay a “high” premium over the 2010 sale price, the sources said, declining to be identified because the bidding process remains confidential.

"This is a very well-established business and a good local brand but the reality is that if you want to acquire it, it won’t be a cheap deal at all,” said one of the sources.

Besides TPG and Carlyle, two of the largest US American buyout funds, more than 20 investment firms, including the Government of Singapore Investment Corporation (GIC), Bain Capital and Apax Partners have all shown interest in joining the bidding, said the sources who described the QHMS sale as so far the “hottest deal” in the private equity investment community this year in Hong Kong.

According to the company website, QHMS provides a wide range of medical services including diagnostics, primary health care and day care specialities. The company currently operates a network of 50 medical centres, more than 500 affiliated clinics, and over 20 dental and physiotherapy centres in Hong Kong.

QHMS also claims to be the largest provider of healthcare services to corporate clients in Hong Kong. In 2011, the firm recorded more than 2.8 million health care visits, according to the website.

One of the sources said some potential buyers had expressed concern that many QHMS clinics in prime Hong Kong locations rented the properties and didn’t own them.

“Whoever takes the business will have to bear the risk of rising rentals in the future once the leases of those prime locations expire -- then you may find that you can’t afford the rent any more,” said the source.

Soaring property rentals and property prices in Hong Kong have forced many retailers, particularly small operators, out of business, with global luxury labels, including Britain’s Burberry and France’s Louis Vuitton, taking over prime Hong Kong locations in recent years.

Most of QHMS’ operations are in rented premises. It has clinics in Central and Tsim Sha Tsui, where rentals have risen significantly in recent years.