Carlyle sees rare scale opportunity in Meinian Onehealth

"Private equity activity in the overall healthcare area has been very strong in the last three years," Janine Feng, a managing director of Carlyle, told AVCJ. "But there are only a few well-known private providers of preventive healthcare check-up services on a nationwide basis."

Last week the private equity firm took a 13.5% stake in Meinian via Beijing Carlyle Investment Center, its joint venture renminbi fund with the Beijing municipal government. Feng sees the company's first-mover status in many cities as a key competitive advantage that sets it apart from its peers.

Founded in 2004, Meinian offers preventive healthcare checkup services, including general medical examinations, disease screening and services such as doctor referrals and traditional Chinese medical services to individual and corporate customers. It is on course to have 83 clinics in 41 cities, with 20 to open by the end of 2012 - a one third expansion in the company's network in less than six months.

"Meinian Onehealth has developed a long-term plan for network expansion, which is being executed in stages throughout the year," said Yu Rong, the company's chairman. "Most of the 20 new clinics are either under construction or close to completion, which will be opened by the end of this year."

He notes that the company has relied on a combination of organic growth and M&A to reach its present size.

Meinian is targeting sales, profit and customer growth of around 50% over the next few years, and the principal challenge of executing such an ambitious growth strategy is likely to be talent management and staff training. In addition to contributing capital, Carlyle will offer its global resources and industry expertise.

The private equity firm's China portfolio companies include Concord Medical Services, which operates 131 radiotherapy and diagnostic imaging centers nationwide and is now pushing into the private hospital space. It bought a 52% stake in Chang'an Hospital in Xi'an a couple of months ago, following a two-year effort, and wants to set up as many as eight private hospitals in the next 10 years.

Feng would not be drawn on the chances of collaboration between Meinian and Concord specifically, merely saying that cooperation opportunities with portfolio companies would be explored.

Both Meinian and Concord represent a play on rising demand for private healthcare services - a direct result of the wider trends such as urbanization, increasing disposable incomes, an aging population and greater awareness of treatment options.

"There is a rising demand for high-quality of service and clinic environment, national-wide access and other value-added services that are available in private clinics," Feng says. "Preventive healthcare is growing around 15% a year and we expect it will continue to increase at such a pace for the next few years."

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• Topics
• Healthcare
• Expansion
• Greater China
• China
• healthcare
• Growth capital
• The Carlyle Group