Singapore Press Holdings (SPH) is entering the healthcare sector with the purchase of nursing home operator Orange Valley Healthcare for $164 million.
The media and property group noted that increasing demand for eldercare services from an ageing society, coupled with the perennial problem of insufficient nursing home beds, made it an attractive long-term business strategy.
SPH chief executive Alan Chan said in a statement: "The investment gives us an opportunity to contribute to the healthcare needs of our ageing community."
He said SPH looks forward to partnering the management and staff of Orange Valley to provide "caring, competent and compassionate service to the elderly and caregivers".
"We also look forward to working with the Ministry of Health and the regional healthcare systems to improve the accessibility and quality of aged care in Singapore," added Mr Chan.
Deputy chief executive Anthony Tan said the acquisition offers a source of stable revenues for SPH.
"It meets our need to broaden and make our revenue base a bit more resilient so that we are able to, in a way, make sure that our core media business can go on and fulfil our objectives," he said.
SPH reported earlier this month that net profit for the second quarter dipped 1.2 per cent while recurring earnings from day-to-day operations were 22.2 per cent lower, mainly due to weakness in its media business. The property business, including malls such as Paragon and The Clementi Mall, fared better.
Orange Valley, which has about 500 employees, runs five nursing homes in Changi, Clementi, Marsiling, Simei and Sims Avenue. It has more than 900 beds in total, making it one of the largest private nursing home operators in Singapore.
Other private players in the scene, which is dominated by voluntary welfare organisations, include Pacific Healthcare, Econ Healthcare and NTUC Health.
Orange Valley, which had a net asset value of about $71 million as at March 31, owns five subsidiaries. These operate meal and catering, home care, physiotherapy and rehabilitation services, and the supply of medical, nursing and healthcare equipment and consumables.
The deal taps a growing market, with the proportion of those aged above 65 expected to double by 2030 to 900,000, making one in four Singaporeans an elderly person.
Add to that the rising trend of single-person households and increasing affluence, and the demand for quality aged-care services will only increase, said Orange Valley chief executive Chan Kay Fei.
He and his management team will continue running the firm.
"A tsunami of change is coming in our demographics and I would say that what we have right now is an incomplete ecosystem because there are changing expectations of what a modern nursing home should be like," he said.
A big player like SPH entering the industry is a game-changer, he said, as it has the financial firepower and clout to introduce new models of eldercare to Singapore and the region. He added: "With SPH's ownership, we could put together new models of care, so we can serve the person along the way and they can age in place and gracefully over time."
SPH's Mr Tan said the group will look for further opportunities to grow its new healthcare business.
"In the local market, we will continue to try to grow the business... by bidding for plots of land from the Government designated for aged care services," he said. "We may look at adjacent businesses and growing some of these, including home care rehabilitation services."
SPH, which owns The Straits Times, will also look at other acquisition opportunities in adjacent fields and expand regionally, he added, noting that there is increasing demand for eldercare services in neighbouring countries too.
Orange Valley was established in 1993, and sold to private equity firm KV Asia Capital in April 2014.
SPH shares ended two cents higher at $3.45 yesterday. The deal was announced after the stock market closed.