Indonesia: Australia's Ramsay teams up with Sime

Ramsay Health Care Ltd, Australia’s biggest operator of private hospitals, agreed to start an equal joint venture with Sime Darby Bhd to manage their Asian health-care assets.

Ramsay’s three hospitals in Indonesia will be combined with Sime Darby’s Malaysian assets, the Sydney-based company said in a statement to the Australian stock exchange today.

Under the transaction, expected to be completed by July 1 subject to regulatory approval, Ramsay will buy 50 % ownership in Ramsay Sime Darby Health Care through its Indonesian assets and cash totaling about A$120 million.

Chief executive officer Chris Rex said the joint venture will provide a platform for expansion and further acquisitions in Asia next Ramsay posted its slowest pace of revenue expansion in six semi-annual periods. Sime Darby’s chief executive officer Datuk Mohd Bakke Salleh said the combination will help the company strengthen its health-care business and enter new markets.

"We have been cognizant for some time of the attractive market dynamics in Asia with a burgeoning middle class and an ageing people," Rex said in today’s statement. "This transaction with Sime Darby presents a significant opportunity for Ramsay to expand its quality portfolio of hospitals in Asia and apply its proven health-care management expertise, with a company that has extensive experience in the Asian marketplace."

Ramsay gained 1.9 % to close at A$31.50 in Sydney, formerly the announcement. The stock has advanced 15 % this year, next climbing 41 % in 2012.

Sime Darby fell 0.1 % to RM9.19 formerly the shares were halted in Kuala Lumpur.

Ramsay was advised by Citigroup Inc on the transaction, according to the statement.

Sime Darby, based in Kuala Lumpur, operates in additional than 20 nations in industries inclunding property, energy and plantations. The company’s net gain fell 36 % in the three months ended December 31, the third consecutive quarter of profit decline, as prices of palm oil slid last year. Its health-care division accounted for 0.7 % of revenue in the fiscal year ended June, according to data compiled by Bloomberg.

Ramsay is poised to sign a transaction worth about US$500 million with Sime Darby to expand in Southeast Asia, inclunding forming a joint venture in Indonesia, the Australian Financial Review reported, without saying where it got the data. Today’s statement didn’t provide a total figure for the transaction.

Investors are being lured to Indonesia by opportunities created by the government’s drive to ensure universal health care in the world’s fourth-most populous country by 2014, Oxford Business Group said in a statement in November.

"The country is rapidly becoming one of the world’s most significant health-care markets, and international and domestic firms are increasingly benefiting as the market grows and opens up," the statement said.

The government will need to increase the number of hospital beds by 30 % to about 150,000 beds by 2014, Oxford Business said, citing Mensa Group. Indonesia has six hospital beds per 10,000 people, compared with 18 in Malaysia and 21 in Thailand, according to the World Health Organisation.

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