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Ramsay Healthcare sells its Malaysian & Indonesian hospitals

Ramsay Health Care (ASX:RHC) had finally sold its Malaysian and Indonesian hospitals owned in partnership with Malaysian conglomerate Sime Darby to 5.7 billion ringgit or $A1.9 billion.

The sale of the business has been an on, off and on again situation for more than two years.

Sime Darby said in a statement on Friday night it will get a profit of around 2 billion ringitt (or more than $A660 million).

Presumably Ramsay will get a similar amount, but as to the size of the actual profit, we will have to wait until Ramsay’s statement first thing Monday morning.

Ramsay said in its September statement that it will use the proceeds to pay down debt.

That was Fitch downgraded the rating of the company’s funding group which is why the company will cut debt and not run a buyback.

In September, Ramsay had committed to completing the sale (with Sime Darby) before its annual meeting on November 28

The buyer is Columbia Asia Healthcare, a company controlled by private equity group, TPG and a Malaysian conglomerate, Hong Leong Group.

The price will be 5.7 billion ringgit – $US, 1.2 billion or $A1.9 billion, according to a stock exchange filing on Friday.

The two companies will sell all their stakes in Ramsay Sime Darby Health Care, which operates four hospitals in Malaysia and three in Indonesia.

Sime Darby’s wholly owned unit Sime Darby Holdings Bhd and Ramsay’s subsidiary AH Holdings Health Care Pty Ltd have entered into an agreement with Columbia Asia for the disposal of their 100% equity interest in RSDH, said Sime Darby in a statement to Bursa Malaysia.

Columbia Asia is a wholly owned subsidiary of Columbia Asia Healthcare Pte Ltd, which is 99.9% owned by HLT Healthcare Holdings Ltd. HLT Healthcare is jointly owned by the Hong Leong Group and One Health Holdings (OHH), which is controlled by TPG-managed funds.
Sime Darby said TPG-managed funds will invest in this transaction together with several co-investors via OHH.

Sime Darby entered the healthcare business nearly four decades ago following the acquisition of Subang Jaya Medical Centre in Selangor from United Estates Projects in 1985. In 2013, Sime Darby and Ramsay set up a joint venture to create RSDHC.

Sime Darby had previously disclosed in late June that it would sell its stake in RSDHC in conjunction with Ramsay. That saw a competitive bidding process conducted, with various potential buyers, including Columbia Asia, participating. A short list was set up in September and the parties then started negotiations.

Ramsay held an Australia-focused investor day on Friday (November 10). Naturally, the impending Malaysian deal was not discussed and the announcement was made later in the day in a filing to the Malaysian stock exchanges.

Ramsay shares rose 1.8% on Friday to $53.93. That saw them gain more than 6% over the week in anticipating of Friday’s announcement. 

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