Singapore-listed Perennial Real Estate Holdings has acquired 49.9 per cent of Shanghai RST Chinese Medical (Renshoutang), the largest integrated eldercare services operator in Shanghai, for about 735.5 million yuan (S$149 million).
Once the deal is completed - slated for the first quarter of next year - Perennial will be the largest single shareholder of Renshoutang, followed by its founder, Dr Feng Qiang, the Singapore firm said in a statement yesterday.
The operator will become an associated company of Perennial and contribute a new stream of recurring income to the group, it said.
Renshoutang has a portfolio of 11 eldercare facilities with over 2,400 beds, as well as four pharmacies, each with a dedicated traditional Chinese medicine clinic. They are mostly in Shanghai's Changning district.
Perennial said the sale price is about 12.9 times of Renshoutang's Ebitda (earnings before interest, tax, depreciation and amortisation), based on the financial results for the 2015 financial year.
"The capital injected into Renshoutang will be mainly used for the acquisition of new projects and a small part will be used to upgrade Renshoutang's existing portfolio of facilities. Perennial will fund the transaction via internal funds and external borrowings," Perennial said.
Renshoutang has well-known brands such as Yixian Eldercare and Retirement Home, which caters to the low- to middle-income group, and Xiehe Eldercare and Retirement Home, which caters to the middle- to higher-income group.
The Shanghai firm has committed to providing more than 5,700 beds and is negotiating another 16,000 beds. The aim is to become the largest eldercare services operator in the affluent Yangtze River Delta region in the next few years.
Perennial chief executive Pua Seck Guan said: "Our investment in Renshoutang provides immediate access to the largest integrated eldercare company in Shanghai with a strong operating track record, and strengthens our 'asset- light' strategy to drive steady long- term income for the group."
Perennial also plans to explore more real estate and healthcare- related opportunities to become a dominant integrated real estate and healthcare firm in China, said Mr Pua.