Government-linked private equity firm Ekuiti Nasional Bhd (Ekuinas) has made its maiden healthcare investments worth MYR79.8 million ($18.18 million) in two Third Party Medical Claims Administrators (TPA) service providers.
The investments comprise the acquisition of 60 per cent equity in MediExpress Group (MediExpress), which consists of MediExpress (Malaysia) Sdn Bhd and Health Connect Sdn Bhd, and another 60 per cent equity in PMCare Sdn Bhd (PMCare).
TPAs act as an interface between consumers, medical funders and health providers, directly tapping into the growth of healthcare and health insurance markets, the firm explained.
MediExpress is a leading Managed Care Organisation (MCO) which operates as a TPA for insurance companies and small medium enterprises (SMEs) segment, whilst PMCare is the leading bumiputera (native) TPA service provider, focusing on the corporate client segment.
Ekuinas said, the two companies shall later be merged under one holding company, to create the largest TPA provider in Malaysia with 40 per cent market share and servicing more than two million members.
Chief executive officer Abdul Rahman Ahmad said, the investments were in line with Ekuinas’ mandate to create industry leading groups in high growth sectors.
“Ekuinas plans to leverage on each company’s strengths in providing value-added services to their customers through a proprietary high technology platform to further expand their business and grow regionally,” he said in a press statement.
Chairman Raja Arshad Raja Uda commented that the healthcare sector is one of Ekuinas’ six identified target sectors for investment and the TPA market forms a fast growing sub sector with a current estimated size of MYR100 million and expected to grow by 10 per cent per annum to reach MYR156 million in 2019.
“Together, they provide a platform for Ekuinas to form the leading TPA service provider in Malaysia and regionally in line with Ekuinas’ mandate to create future market leading companies.”
MediExpress was originally incorporated in 1998 for the purpose of managing Sihat Malaysia under the initiative of 39 insurance companies. It is headed by Paul Cheok focusing on managing inpatient benefits on behalf of insurance companies and through Health Connect, services outpatient benefits administration needs.
The group now has more than one million members across an extensive health provider network of over 3,000 clinics and 150 hospitals.
PMCare, which is led by Wan Shukri Ariffin and Adzahar Abdul Wahid, specialises in the administration of corporate clients’ medical benefits and caters to over 600,000 members across more than 3,000 medical providers nationwide.
Together, both companies generated a combined revenue of more than MYR50.0 million in FY2014.
Ekuinas has also undertaken a MYR70 million ($15.95 million) follow-on investment in Orkim Sdn Bhd to help the company finance the acquisition of three additional Clean Petroleum Product (CPP) Tankers.
This brings the total vessels owned by Orkim to 14, making it the largest CPP transportation provider in Malaysia, with an estimated market share of 24 per cent.
Ekuinas first invested in Orkim in December 2014, committing MYR346.3 million for a 95.5 per cent stake in Orkim as part of its strategy to create a leading regional downstream petroleum transportation and logistics group.
With the follow-on commitment in Orkim, Ekuinas’ latest investments amount to MYR149.8 million ($34.13 million), as well as investments completed under its Outsourced Programme, Ekuinas has undertaken a total of 38 investments since inception.
Together with co-investments from private sector partners, Ekuinas has facilitated a total economic deployment of MYR3.2 billion, positively impacting the Malaysian economy.