Australia’s Ramsay Health Care and Malaysian conglomerate Sime Darby have reached an RM5.7bn ($1.2bn) deal to divest their stakes in their hospital joint venture (JV), Ramsay Sime Darby Health Care (RSDH), to Columbia Asia Healthcare (Columbia Asia).
The deal, which is expected to close in the third quarter of fiscal 2024, awaits clearance from Australia’s Foreign Investment Review Board.
With this sale, Sime Darby will quit the healthcare business, which it considers non-core.
The Malaysian company anticipates an RM2bn gain on the sale and said that it will offer funds to bolster its core Industrial and Motors operations.
Sime Darby Group CEO Jeffri Salim Davidson said: “While the hospital business is a great asset, we have always maintained our focus on our core trading businesses of Motors and Industrial. The offer from Columbia Asia was one we could not refuse.”
Ramsay anticipates a net profit after tax of almost A$630m on the divestment of its share of the JV.
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Before tax and following transaction costs, it expects proceeds of nearly A$935m from the deal.
It will use the proceeds to pay down debt, leading to annualised interest cost savings of A$55m.
Ramsay Health Care and Sime Darby hold a stake of 50% each in RSDH, which is an Asia-focused JV set up in 2013.
The JV operates three hospitals in Indonesia as well as four hospitals in Malaysia.
Malaysia’s Columbia Asia is fully owned by Columbia Asia Healthcare Pte. Ltd. (CAHSG).
CAHSG is 99.9% owned by HLT Healthcare Holdings, with Malaysia-based Hong Leong Group and TPG-managed funds-backed One Health Holdings (OHH) having joint ownership of HLT.
Through OHH, TPG-managed funds will invest in this deal along with many co-investors.
In addition to TPG and Hong Leong Group, Malaysia’s Employees Provident Fund and a wholly owned subsidiary of the Abu Dhabi Investment Authority will offer new capital to finance the deal.
Upon completion of the deal, the OHH co-investors will have a total stake of around 25% in OHH.
At present, Columbia Asia, along with its subsidiaries, has 22 medical facilities across Asia, of which 14 are in Malaysia.
Columbia Asia director and TPG senior adviser YAM Tunku Ali Redhauddin ibni Tuanku Muhriz stated: “RSDH has a unique platform of hospitals with a long history of excellent patient care for the communities that it serves in Malaysia and Indonesia.”
According to Reuters, the latest transaction is the largest healthcare acquisition in Southeast Asia since 2019, when Hong Leong Group and TPG acquired Columbia Asia’s assets in a deal worth nearly $1.2bn.
It follows Sime Darby’s move to offload RSDH to IHH Healthcare, which was derailed last year.