Singapore Press Holdings (SPH) has entered the healthcare sector with the acquisition of nursing home provider Orange Valley Healthcare Pte Ltd.
The purchase cost S$164 million (about US$117.7 million), which is 2.3 times more than Orange Valley’s estimated Net Asset Value (NAV) of S$71 million on March 31, 2017.
The deal will involve all the shares and intellectual property of Orang Valley being transferred from private equity firm KV Asia Capital, which has previously acquired the target in April 2014, to SPH.
This marks the largest non-property acquisition ever made by SPH, as well as the first of potentially more in the healthcare space. According to SPH, the hope is to build a third major business that will help the group financially as the core media arm goes through a downturn.
Orange Valley runs five nursing homes in Singapore, strategically located in Changi, Clementi, Marsiling, Simei and Sims Avenue, with more than 900 beds altogether. These are locations near major hospitals or housing estates with a high density of senior population.
The company charges about S$2,500 to S$2,700 per month for each bed, placing it at the premium end of the Singapore market.
Besides, the healthcare firm established in 1993, also operates a number of ancillary services such as providing meal and catering services, physiotherapy and rehabilitation services, as well as supplying medical, nursing and healthcare equipment and consumables.
“Orange Valley has been providing Singaporeans with a one-stop comprehensive eldercare service for more than 20 years,” said Karam Butalia, the Executive Chairman of KV Asia Capital.
“We trust that SPH will help solidify its position as the pre-eminent provider of high-quality nursing care in Singapore, and bring its holistic and integrated healthcare service to a higher level,” Karam added.
Furthermore, the proportion of the population aged above 65 in Singapore is expected to double by 2030 to 900,000 from the current 450,000. This means 1 in 4 Singaporeans will be elderly, which will lead to strong demand for aged care services in the next decade.
According to SPH, as family sizes shrink, there will be a surge of single elderly living alone. This will lead to increasing demand for quality aged care services across the spectrum of home care, community-based care to nursing homes.
“Singapore has a graying population with a need for long-term medical care. The investment gives us an opportunity to contribute the healthcare needs of our aging community,” said SPH Chief Executive Alan Chan. “We look forward to partnering the management and staff of Orange Valley to provide caring, competent, and compassionate service to the elderly and their caregivers.”
With this deal signed, the Deputy Chief Executive of SPH, Anthony Tan also notes that SPH will look further opportunities to grow its new healthcare business.
“Aged care if you think about it is always a continuum,” Anthony Tan said. “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.”
Besides, the company also hold prospects for regional expansion and other acquisition opportunities in adjacent fields to expand regionally.
Orange Valley Chief Executive Officer Chan Kay Fei said, “the aging issue is not just affecting Singapore but also continues across the region. It’s an Asian problem so whatever good model of care we can develop for Singapore will be relevant for the region.”
By Vivian Foo, VCNewsNetwork