Lunar buys majority stake in Hong Kong IVF business

Lunar will take a 64.85% stake in TWCGL Mason Group subsidiary that in turn owns 46.71% of what is now known as The Women’s Clinic Group (WCG), according to a filing. Mason Group entered the IVF space in 2016. Two years later, it acquired The Women’s Clinic, another Hong Kong-based IVF player, for HK$435 million, including HK$210 million in cash.

The combined entity enjoyed a 30% local market share, with nearly 30 doctors and specialists working across three clinics and three IVF laboratories, it was said at the time. The company provides a range of services across reproductive medicine, obstetrics and gynecology, embryology, and urology.

Mason Group concurrently announced a strategic agreement with WeDoctor, a Tencent Holdings-backed Chinese digital healthcare platform that has over 240 million registered users for online appointment booking, prescription, and diagnosis services. The plan was for WeDoctor to leverage its network within mainland China to generate inbound business for WCG.

WeDoctor committed HK$116.8 million for a 19.5% interest in TWCGL, while two other investors, Aldworth Equity Management and HEG, put in HK$33.9 million and HK$60.3 million for stakes of 5.7% and 10%, respectively. This left Mason Group with 64.85%.

Mason Group said the decision to divest was driven by COVID-19, which has negatively impacted the business and created uncertainty as to its prospects. TWCGL posted a net profit of HK$17 million for the 12 months ended December 2020 compared to a loss of HK$22.5 million the previous year.

However, Mason Group’s difficulties pre-date COVID-19. The company said in its 2020 interim report that integrating and managing businesses acquired as part of a “health and wealth” strategy had been challenging. Mason Group said it remained committed to pursuing healthcare opportunities in China, but the company has offloaded other assets, including IVF and infant formula businesses in Australia.

Mason Group posted a turnover of HK$2.68 billion in 2019, down from HK$4.1 billion in 2018, while swinging from a net profit of HK$176 million to a net loss of HK$1.17 billion. In the first six months of 2020, turnover fell 74.7% year-on-year to HK$389.5 million and a HK$90.7 million profit turned into a HK$33.3 million loss.

In 2019, the company’s various healthcare businesses were responsible for a loss of HK$170.3 million versus a profit of HK$140.9 million a year earlier. In the first six months of 2020, net profit reached HK$18.4 million – up from HK$8.34 million for January-June 2019 – but most of that came from divestments.

Lunar targets Chinese consumer companies with reputable brands across lifestyle, fashion, health, and food and beverage. It has existing exposure to the broader childcare and maternity industry through the likes of babycare brand Yeehoo.

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• Topics
• Greater China
• Buyouts
• Consumer
• Healthcare
• China
• Hong Kong (China)
• Lunar Capital Management