Indonesia's powerful Riady family has sent strong signals over the past week that it is determined to expand its presence in the booming regional healthcare market.
The family's latest move came last Tuesday when it launched a cash offer of 4.2 cents a share - $103 million in all - for Healthway Medical Corp (HMC), Singapore's largest private clinic chain.
A day later, OUE, which is also controlled by the family, increased its stake in International Healthway Corp (IHC) to 21.83 per cent.
OUE had acquired an initial 12.54 per cent stake in IHC, which owns medical facilities overseas, last month. At one point, HMC had been a parent of IHC.
It is no surprise that healthcare firms are being targeted. The sector was one of the best share market performers here last year with a gain of 4.3 per cent, outstripping the benchmark Straits Times Index's total returns of 3.8 per cent, said a Singapore Exchange (SGX) report.
"Lippo and Lippo China Resources see the business potential in the healthcare industry in Singapore, and would therefore like to establish their presence in this field," Lippo's offer vehicle, Gentle Care, said in an offer announcement to the SGX last week.
The Lippo-linked firms now have a 17.48 per cent stake in HMC.
Mr Liu Jinshu, NRA Capital's director of research, said it is not surprising that the Riady family, which controls Indonesian giant conglomerate Lippo Group, is acquiring medical assets. "Lippo already runs and owns the Siloam chain of hospitals in Indonesia. Therefore, the acquisition of overseas medical assets is helpful to the extent that Lippo can inject its systems and processes into these assets to extract synergies."
He added: "IHC and Healthway's share prices aren't high. The family is essentially buying into assets on the cheap."
The Riadys' move into healthcare could signal a growing interest in medical tourism, said Mr Justin Tang, director of global special situations at Religare Capital Markets.
"Nothing is more certain than death and taxes. The Riadys are very astute businessmen who keep evolving with a changing world. They probably see the ageing population as the next money-making opportunity," he added.
Healthcare players, in general, are looking at mergers and acquisitions or collaborations to extend their footprint and diversify earnings, said OCBC Investment Research, which has a hold call on the healthcare sector.
This, especially as ageing populations and growing cases of chronic diseases continue to drive demand for more complex healthcare services and medical tourism.
Other than healthcare deals, the Riady family also made an offer last Tuesday to buy out Auric Pacific Group, the maker of Sunshine bread and owner of Food Junction foodcourts and Delifrance cafes, and take it private. The offer of $1.65 in cash for each share was made by Silver Creek Capital, an investment vehicle jointly owned by Dr Stephen Riady and his son-in-law Andy Adhiwana, who are controlling shareholders of Auric Pacific.
