Raffles Medical: Has proposed to acquire a 55% stake in International SOS MC Holdings (MCH) for $34.3m. As a guide, MCH operates 10 clinics in countries/cities where Raffles Medical does not have a presence in - six in China, three in Vietnam and one in Cambodia.
The vendor, AEA International Holdings, is an established global service provider which offers medical assistance, security, evacuation, travel and consulting services to customers in 92 countries. It started operations in Singapore in 1985 to provide emergency medical assistance services in Southeast Asia, before acquiring International SOS assistance in 1998 and renamed the business as International SOS.
Maybank-KE highlights that this is Raffles Medical’s first major overseas acquisition since 1997, when it acquired a medical group in Hong Kong. Along with the recently finalised Shanghai Hospital Project, this further substantiates its commitment to growing beyond Singapore.
Overall, the deal is not expected to contribute meaningfully to the group’s earnings at first, but it will provide instant access to new markets, where it could scale up and establish a wider referral network for its Singapore hospital and future China hospital.
The house maintains Buy with a TP of $5.40. Catalysts will stem from further progress in China as well as more expansions.