TPG, Fosun set for $369m China healthcare take-private

The buyer consortium will pay $19.50 in cash for all outstanding shares, a 17% premium to the previous close. They will finance the transaction through cash from TPG, a combination of cash and equity from Fosun Pharma, and equity contributed by CEO Roberta Lipson and other management members.

According to a regulatory filing, post-transaction TPG Asia VI will control 48.14% of Chindex, Fosun Industrial will hold 48.65%, and Lipson will have 3.21%. Lipson, an American who moved to China in the late 1970s and set up the business with Elyse Beth Silverberg in 1981, will remain CEO.

Chindex describes itself as an American health care company providing services in China through United Family Healthcare, a network of private primary care hospitals and affiliated ambulatory clinics. The brand operates in Beijing, Shanghai, Tianjin and Guangzhou, and also provides medical equipment and products through Chindex Medical, a joint venture with Shanghai Fosun Pharmaceutical, an affiliate of Fosun Industrial.

The joint venture was 51%-owned by Fosun Pharma, with Chindex holding 49%. However, following the acquisition of medical equipment manufacturer Alma Lasers last year by Fosun Pharma, the Pamerica-Fosun China Opportunity Fund and Chindex Medical, Fosun Pharma's share in the joint venture rose to 70%. This reflected capital committed to support Chindex Medical's equity contribution to the deal.

"Over the last 15 years, Chindex has built its United Family Healthcare network into a premium brand, but we believe that new partners and committed financing are needed to achieve the next phases of these plans, including new facilities in our current service locations as well as significant geographic expansion," Lipson said in a statement.

Chindex reported a net income of $4.1 million in 2012, up from $3.2 million the previous year. Revenues rose from $114.4 million to $152.4 million over the period.

The company and its advisors have until early to mid April to seek alternative proposals from buyers. The current bid also requires shareholder approval before a transaction can be completed.

This is TPG's second China take-private following the completion of a management buyout of ShangPharma Corporation in March 2013. The deal valued the pharmaceutical and biotech research consulting firm at $173 million.

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• Topics
• Buyouts
• Greater China
• Healthcare
• North America
• China
• buyout
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• TPG Capital
• Fosun Group
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