GIC to take 16% stake in Malaysia’s Sunway Healthcare once $243 million is drawn down, Companies & Markets News & Top Stories

KUALA LUMPUR – Singapore’s sovereign wealth fund GIC will invest RM750 million (S$243 million) in Malaysian conglomerate Sunway’s medical unit, giving it an eventual 16 per cent share of one of the country’s leading healthcare providers.

The deal inked on Wednesday (June 23) was designed to let Sunway Healthcare draw down capital from GIC when needed during a planned expansion that will add up to six new hospitals in Malaysia. It will then have a total of eight centres with 3,000 beds, giving it a final valuation of RM4.7 billion.

Sunway chairman Jeffrey Cheah said the partnership would facilitate plans to expand its healthcare arm before an initial public offering “a couple of years down the road” after the new hospitals are operational.

“What is there to stop us? We have the money, we have the experience, we have the brand, the licence and we already have the land,” the group’s founder told a virtual press conference.

Sunway will have “flexibility to list (the medical unit) between six and eight years,” according to group president Chew Chee Kin.

“Normally, you want the hospitals to start making money before you list… Most will be ready in three to four years and be (profitable) by listing,” he said.

GIC’s disbursement will be staggered over more than three years, giving the fund a better yield based on the time value of money. It will have the option to exit during the listing.

Sunway Healthcare will also be raising debt to fund the expansion.

GIC’s head of direct investments of private equity into South-east Asia, Mr Amit Kunal, said in a press release: “We believe the private healthcare in Malaysia will benefit from trends such as an ageing population, the expanding and rising affluence of its middle class as well as a robust healthcare insurance penetration.”

During the virtual signing on Wednesday, Malaysian Prime Minister Muhyiddin Yassin said 14 per cent of the population was expected to be aged 65 or older by 2044.

“This sizeable foreign direct investment in a Malaysian company is a demonstration of confidence in both Sunway and the Malaysian economy. It also testifies to the excellent track record of Sunway in this industry, as well as the immense potential of the healthcare sector in Malaysia,” he said, pointing out how Fitch Solutions Macro Research projected that Malaysia’s healthcare market to grow by 127 per cent to RM127.9 billion in 2027 from RM56.3 billion in 2017.

Aside from its two hospitals in the Klang Valley, Sunway Healthcare also operates ancillary healthcare businesses, including Sunway Medical Centre Singapore.

It is developing new hospitals in Ipoh, Iskandar Puteri and Kota Bharu, as well as two new facilities in Penang.

GIC had taken a stake in Sunway’s flagship Pyramid mall in 2000 after the Asian financial crisis and then the Sunway Resort and Pyramid Tower hotels in 2005, making gains after these properties were absorbed into Sunway’s Real Estate Investment Trust.

Its exact yields were not made public, but Tan Sri Cheah said during the press conference that “GIC came with one bag and left with several”.