Ramsay Teams Up With Sime Darby on Asian Hospital Assets

Ramsay Health Care Ltd. (RHC), Australia’s biggest operator of private hospitals, agreed to start an equal joint venture with Sime Darby Bhd. (SIME) to manage their Asian health-care assets.

Ramsay’s three hospitals in Indonesia will be combined with Sime Darby’s Malaysian assets, the Sydney-based company said in a statement to the Australian stock exchange yesterday. Under the deal, expected to be completed by July 1 subject to regulatory approval, Ramsay will buy 50 percent ownership in Ramsay Sime Darby Health Care through its Indonesian assets and cash totaling about A$120 million ($126 million).

Chief Executive Officer Chris Rex said the joint venture will provide a platform for expansion and further acquisitions in Asia after Ramsay posted its slowest pace of revenue expansion in six semi-annual periods. Sime Darby’s Chief Executive Officer Mohd Bakke Salleh said the combination will help the company strengthen its health-care business and enter new markets.

“We have been cognizant for some time of the attractive market dynamics in Asia with a burgeoning middle class and an aging population,” Rex said in yesterday’s statement. “This deal with Sime Darby presents a significant opportunity for Ramsay to expand its quality portfolio of hospitals in Asia and apply its proven health-care management expertise, with a company that has extensive experience in the Asian marketplace.”

Ramsay gained 1.9 percent to A$31.50 in Sydney yesterday, before the announcement. The stock has advanced 15 percent this year, after climbing 41 percent in 2012.

Sime Darby fell 0.1 percent to 9.19 ringgit before the shares were halted in Kuala Lumpur yesterday.

Ramsay was advised by Citigroup Inc. on the transaction, according to the statement.

Diversified Group

Sime Darby, based in Kuala Lumpur, operates in more than 20 nations in industries including property, energy and plantations. The company’s net income fell 36 percent in the three months ended Dec. 31, the third consecutive quarter of profit decline, as prices of palm oil slid last year. Its health-care division accounted for 0.7 percent of revenue in the fiscal year ended June, according to data compiled by Bloomberg.

Ramsay is poised to sign a deal worth about $500 million with Sime Darby to expand in Southeast Asia, including forming a joint venture in Indonesia, the Australian Financial Review reported, without saying where it got the information. Yesterday’s statement didn’t provide a total figure for the deal.

Indonesian Opportunity

Investors are being lured to Indonesia by opportunities created by the government’s drive to ensure universal health care in the world’s fourth-most populous country by 2014, Oxford Business Group said in a report in November.

“The country is rapidly becoming one of the world’s most important health-care markets, and international and domestic firms are increasingly benefiting as the market grows and opens up,” the report said.

The government will need to increase the number of hospital beds by 30 percent to about 150,000 beds by 2014, Oxford Business said, citing Mensa Group. Indonesia has six hospital beds per 10,000 people, compared with 18 in Malaysia and 21 in Thailand, according to the World Health Organization.

To contact the reporter on this story: Jason Scott in Canberra at jscott14@bloomberg.net

To contact the editor responsible for this story: Edward Johnson at ejohnson28@bloomberg.net; Jason Gale at j.gale@bloomberg.net

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