SINGAPORE – Singapore-listed Thomson Medical Group (TMG) has made the largest healthcare acquisition in South-east Asia since 2020 with the purchase of Vietnam’s biggest private healthcare group, FV Hospital, for about US$381.4 million (S$517 million).

The move marks TMG’s strategic entry into one of the region’s fastest-growing economies, and gives it a major presence in the country with a population of 98 million.

The deal was stitched together by TMG’s executive vice-chairman Kiat Lim after competitive bidding, which started with as many as 20 other global suitors.

According to Mr Lim, the acquisition paves the way for other investments across the healthcare value chain in Vietnam.

“FV is a premium tertiary French-built hospital, and we have been chasing this asset for over half a year, much of the time doing due diligence,” said Mr Lim, 30, the son of controlling shareholder and tycoon Peter Lim.

Under the terms of the deal, TMG will acquire 100 per cent of Far East Medical Vietnam Limited, which operates a range of healthcare facilities in Vietnam, including FV Hospital and a network of primary and specialist clinics.

Based on the initial consideration of approximately US$359.6 million (before key earnings targets are met), the deal translates into an enterprise value (EV) of US$328.5 million.

With a financial year 2022 Ebitda (earnings before interest, taxes, depreciation and amortisation) of US$19.5 million, the EV/Ebitda ratio works out to 16.8 times.

TMG said the purchase will be funded via a combination of internal resources and external borrowings from financial institutions and debt capital markets. No rights issue is envisaged.

While not disclosing the impact on the balance sheet, Mr Lim said the immediately earnings-accretive deal would have a strong positive impact on the group’s bottom line.

“We will be operating in the premium segment of the fastest-growing private healthcare market in the region,” he said.

“The healthcare spending-to-GDP ratio in Vietnam has historically been low, but is taking off rapidly. Medical tourism, especially from other Indochina nations, is also growing rapidly. In short, we have acquired the right hospital, in the right geography, at the right time.”

Medical tourism from neighbouring countries Laos and Cambodia is expected to generate revenues of some US$2 billion in 2023 for Vietnam. FV Hospital is located in Ho Chi Minh City, within the populous Mekong Delta, where spending on medical care is expected to grow by double-digit percentages in the coming years, he said.

Between 2019 and 2022, FV Hospital’s revenue had grown at a compounded annual rate (in Singapore-dollar terms) of 8.2 per cent, while Ebitda had risen by 13.9 per cent and profit after tax had increased 14.8 per cent.

If the deal had been completed in FY2022, TMG’s revenue would have increased by 33 per cent from $334 million to $444 million on a proforma basis, and its Ebitda by 21 per cent from $110 million to $133 million.

Dubbed the “Gleneagles Hospital of Vietnam”, FV Hospital was founded by Dr Jean-Marcel Guillon in 2003 with a group of French physicians. Located in District 7 of Ho Chi Minh City, it has evolved into a full-service, one-stop provider of quality healthcare for patients locally, as well as those from Cambodia, Laos and Myanmar.

Dr Guillon and his management team will stay on with TMG to continue running the hospital.

Covering a gross floor area (GFA) of 26,300 sq m and with a staff of over 1,600 healthcare professionals, including over 200 doctors, FV Hospital provides care in more than 30 medical specialities, including oncology, cardiology, ophthalmology, orthopaedics, maternity and gastroenterology.

It had almost 200 operating beds as at December 2022 and is currently undertaking an expansion with a new seven-floor structure, adding another 9,100 sq m in GFA.

Since 2013, FV Hospital has also operated an outpatient clinic known as FV Saigon Clinic at the heart of Ho Chi Minh’s District 1 business-financial precinct.

The deal adds significant scale and size to TMG, which itself is one of the most established Singapore healthcare groups.

Set up in 1979, and acquired by Mr Peter Lim in 2010, TMG provides women’s and children’s healthcare services via its flagship, Thomson Medical Centre.

Since assuming the role of executive vice-chairman in September 2022, Mr Kiat Lim has strengthened and rebuilt TMG’s management team and rolled out an ambitious strategic growth map for the group.

Beyond Vietnam, TMG is looking at other healthcare acquisitions in Indonesia, Malaysia, Thailand, Cambodia and even Singapore.

“We are going deeper and broader into markets where there is both commercial viability and strategic synergies,” Mr Lim said.

“Healthcare is a sector which offers flexibility to add value to our core offering and franchise. But we have to be clever about it. We have to be nimble.”

The group successfully grew its Malaysian operations under Bursa-listed TMC Life Sciences (TMCLS) after acquiring it in 2010. TMCLS, which operates Thomson Hospital Kota Damansara and TMC Fertility Centre, reported revenue of RM243.8 million (S$70.2 million) for the year ended June 2022, a four-fold increase from RM56.1 million in 2010.

The FV Hospital deal is expected to be completed before the end of 2023.

Trading in TMG shares was halted before the Singapore market opened on Wednesday. They closed on Tuesday at 6.1 cents, 0.1 cent or 1.7 per cent higher.