TPG, Fosun Pharma sell United Family Healthcare for $1.44b

China-focused investment firm New Frontier Corporation will be acquiring private healthcare operator United Family Healthcare (UFH) from alternative investment firm TPG and Fosun Pharma for $1.44 billion.

The TPG stake is worth $1.3 billion approximately, according to a statement.

The transaction is aimed at creating China’s largest publicly listed integrated healthcare service company, according to an announcement.

Upon closing of the transaction, UFH will be rebranded as New Frontier Health Corporation (NFH) and is expected to list on the New York Stock Exchange.

“Existing management of UFH and Fosun Pharma will roll a portion of their ownership in UFH and together are expected to own an aggregate of approximately 12 per cent of NFH at closing,” New Frontier said in a statement, adding that Fosun Pharma will remain as an important long-term strategic partner of the acquired entity.

Antony Leung, co-founder and chairman of New Frontier Group, the sponsor of New Frontier Corporation, will become chairman of NFH’s board of directors, and Roberta Lipson, founder and CEO of UFH, will continue as CEO of NFH.

NYSE-Listed New Frontier revealed that it will use the $478 million proceeds raised from its IPO and an additional $711 million in equity commitments from a group of strategic investors and global asset managers including Vivo Capital and Nan Fung Group, to fund the acquisition. It has also obtained up to $300 million in debt commitments from several lenders.

UFH, founded in 1997, operates nine hospitals and 14 clinics in all four tier-1 cities and selected tier-2 cities in China. The company offers services including primary care, family medicine, pediatrics, obstetrics, gynecology, IVF, surgery orthopedics, oncology and other specialties.

As the acquisition is completed, UFH will be given the exclusive right to manage New Frontier Group’s 64,000-square-meter flagship Shenzhen city centre hospital, which will anchor UFH’s asset-light management strategy, New Frontier added.

“We invested in UFH with the belief that the company was in a strong position to address a substantial and growing need for quality private healthcare in China. Over the past five years, UFH has had tremendous clinical, operational and commercial success in expanding its footprint and growing its customer base across China,” commented Scott Chen, partner of TPG Capital Asia.

Over the course of its investment, TPG has helped UFH double its hospital and clinics footprint and tripled bed capacity, said Antony Leung, New Frontier’s co-founder and chairman. “Healthcare has been an important strategic focus for New Frontier. We believe we will be strong strategic partners given our significant operating and investment experience in China.”

Healthcare has been too one of TPG’s leading sectors of focus, particularly in Asia. The $108 billion firm has recently raised nearly $14 billion for its flagship global buyout fund and a healthcare investment vehicle after it closed the $4.6 billion seventh Asia-focused fund.

Last year, its healthcare investment platform Asia Healthcare Holdings, which invests in single-specialty healthcare businesses in India and South Asia, raised $50 million from Temasek. The platform has acquired Nova IVI Fertility in India.

The firm owns another platform, TE Healthcare, and has invested in healthcare groups including Parkway Holdings (exited to Malaysia’s IHH Healthcare), Asiri Hospitals, Healthscope (acquired in 2018 for A$279 million) and Manipal Health, among others.

TPG along with Manipal Health and Temasek is now reportedly looking to acquire Medanta hospitals India.