Singapore’s Pacific Healthcare Holdings said it plans to invest in seven medical centres across Asia this year through a joint venture with private equity investor Kuwait Finance House (Malaysia) Bhd.
Pacific Healthcare chief executive William Chong also said his company wanted to jointly run one of Kuwait’s largest private hospitals, the Al Salam Hospital, in which the listed parent of Kuwait Finance House (Malaysia) is a significant stake-holder. Kuwait Finance House is one of the leading Islamic lenders in the Middle East.
Last month, the healthcare provider said it had set up Aliph Pacific Pte Ltd, a S$32 million ($21 million) joint venture firm in which Kuwait Finance House (Malaysia) Bhd has a 60% stake.
“With our new joint venture partner, Kuwait Finance House, we would co-invest in up to seven medical centres,” Chong, who is a dental surgeon by training, told Reuters in an interview on Tuesday. He said the firm could invest either cash or assets.
“Within the next month we should be able to come out with a proper announcement on what our joint venture with Kuwait Finance will be doing this year.”
Pacific Healthcare runs several specialist clinics in Singapore. In the past two years, it has expanded in Hong Kong, China, India and more recently in Vietnam, mostly through joint ventures and management contracts.
Chong said the joint venture with Kuwait Finance would help the firm to start operating in the Middle East.
Pacific Healthcare, which has a market value of about US$53 million, may also open more healthcare and wellness clinics in China this year. It invested in its first two such centres in Shenzhen last year which will start operating by mid-2007.
Pacific Healthcare plans to buy up to 40% of shares in unlisted Radlink Diagnostic Imaging in the next two months to develop a strong partner in the diagnostic imaging business.
Last year, Pacific Healthcare decided to focus on heart and cancer treatments, cosmetic surgery and dentistry.
It sold 15 of its 18 general practice clinics as well as a diagnostic imaging centre, and securitised three properties – two nursing homes and a psychiatric hospital – through a sell and leaseback arrangement with First Real Estate Investment Trust.
However, the expansion abroad and consolidation at home hit profits. Pacific Healthcare last week announced a 12% fall in net profit for 2006, despite a 32% rise in revenue from the year-ago period.
“Restructuring always comes at a cost and with a certain amount of pain,” said Chong. “2006 was a watershed year in a sense. Now with everything behind us, the company is strong and on its path of growth from here.”
He said some of the gains from last year’s asset sales in Singapore would boost profits in the first half of 2007.
Shares in Pacific Healthcare rose 1.7% to S$0.30 at midday on Tuesday, off their all-time high of S$0.36 set on Feb. 13.
The stock trades at 10.5 times 2007 forecast earnings, compared with a price-earnings ratio of 24 for local peer Parkway Holdings, while shares in Thailand’s Bumrungrad Hospital trade at 22 times.
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