Temasek invests $250m in China healthcare venture

Temasek's investment will make it a 50-50 partner with Columbia in Columbia China, its already-established local healthcare arm. Columbia China operates a 220-bed orthopedic hospital, two multi-specialty clinics and three assisted living homes, all in Shanghai and Beijing. Three more multi-specialty hospitals are under development representing a total of up to 1,500 beds, along with another assisted living home in Ningbo and other facilities across China.

The chain will use the capital from Temasek to expand further through acquisitions and greenfield construction, according to a release. It is focusing on large cities where it can address the medical needs of China's expanding middle class.

Seattle-based Columbia Pacific has been active in Asia since 1996, when it opened its first hospital in Malaysia. It now operates 27 hospitals and two clinics across India, Indonesia, Malaysia and Vietnam through its subsidiary Columbia Asia, which received a $101 million investment earlier this year from Japan's Mitsui & Co.

Columbia entered China in 2011, when it gained permission from the Chinese government to build its senior care facilities in Beijing and Shanghai. It later acquired its Shanghai-based hospital and clinic assets.

China's rapidly growing elderly population and their medical needs are putting increasing pressure on the country's healthcare system. According to a report by Deloitte, the number of hospitals in China grew from 20,000 to 24,000 between 2008 and 2014, while private hospitals' share of that total increased from 27% to 47%.

While public hospitals still provide the vast majority of medical services in the country, the government has begun to encourage the use of private hospitals to reduce the burden on public facilities and in 2014 permitted 100% foreign direct ownership of hospitals in several major cities.

These changes have led to a surge of PE interest in China's hospital and healthcare services space in recent years, with AVCJ Research showing $1.4 billion invested in 2014, after less than $500 million total invested between 2005 and 2013.

The pace slowed somewhat since, with $379 million recorded in 2015 and $178 million so far in 2016, but there have still been some significant investments this year. In March, Bain Capital bought a majority stake in hospital operator Asia Pacific Medical Group for $150 million, and CITIC Private Equity invested in cancer hospital business New Journey Hospital Group. Then in May Warburg Pincus committed an undisclosed amount to Shanghai-based hospital chain UIB.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Healthcare
• Expansion
• China
• Temasek Holdings
• Growth capital