News analysis

Can Rowsley deliver as major healthcare player?

Tycoon Peter Lim's move to inject two sizeable healthcare assets into Rowsley can be seen as a bold effort to revive a firm that seemed to be going nowhere.

Mr Lim has been behind many high-profile deals in the past, of course, and not all of them have panned out as promised.

So punters will be hoping the newest transformation plan for Rowsley - this time to turn the real estate group controlled by Mr Lim into a major healthcare player - will be different. The play is an audacious one with Mr Lim injecting 100 per cent stake in private firm Thomson Medical and 70.36 per cent stake in Malaysia-listed TMC Life Sciences into Rowsley.

But how good the deal turns out to be for shareholders will depend on how much growth the company can deliver for the price being paid.

The $1.6 billion price tag is 30 times the adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) of $53.2 million for the healthcare assets in the 12 months to Aug 31.

Loss-making Rowsley, with interests in a mishmash of businesses including real estate, design consultancy and hotel management, has a long history of chasing acquisitions that do not always live up to expectations.

In 2007, it unveiled plans to acquire a China solar energy firm by issuing $2.7 billion worth of new shares. The firm had not sold a single solar panel at that point and the deal was scrapped five months later.

In 2013, Rowsley acquired RSP Architects and a 9.23ha plot of land in Iskandar, Johor, for $545 million in all-share deals. Mr Lim owned 70 per cent of the plot known as Vantage Bay, the Johor royal family owned the other 30 per cent.

But the Vantage Bay township project faced constant delays owing partly to real estate oversupply. In 2015, it was re-positioned to be a healthcare hub, with Thomson Medical roped in.

Rowsley said yesterday that the Thomson Iskandar Medical Hub, comprising a 500-bed hospital and 400-suite medical tower, would be completed in 2021.

Last year, Thomson Medical executive chairman Roy Quek announced plans to add 300 beds to the 187-bed Thomson Medical Centre in Thomson Road.


But Rowsley's announcements yesterday made no mention of this. The group has yet to receive the relevant approvals from the Health Ministry to execute, and Mr Quek declined to give a target completion date for the expansion.

By being part of a listed entity, Thomson Medical has the ability to tap the equity market for firepower to compete for more acquisitions with other rivals in Singapore's healthcare space.

But Thomson Medical has also faced challenges in realising its expansive ambitions, and needs a good team to hit the ground running once shareholders approve the acquisition.

A version of this article appeared in the print edition of The Straits Times on December 19, 2017, with the headline 'Can Rowsley deliver as major healthcare player?'. Print Edition | Subscribe