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Japan : ITOCHU Announces Update on Partnership with Lippo Group in Healthcare Business in Asia
Publish Date : 25-Sep-2018
ITOCHU Corporation announced in February 2018 it made a strategic investment in OUE Lippo Healthcare Limited (hereinafter OUELH), a listed company on the Catalist Board of the Singapore Exchange (hereinafter the SGX), to acquire a 25.3% equity interest in order to embark on the joint development of the healthcare business in Asia with the Indonesia-based Lippo Group.OUELH is a business platform where ITOCHU and Lippo Group will jointly work in a partnership with leading local partners to expand its Healthcare Business in Asia, such as China, Myanmar, Vietnam and Thailand.
In order for OUELH to secure a stable and growing stream of recurring income and cash flow, OUELH will acquire 1) a 10.63% stake in First Real Estate Investment Trust (hereinafter First REIT) which is the first listed healthcare REIT of the Main Board of the SGX since 2006 whose sponsor is the Lippo Group, and will also acquire 2) a 40% shares in Bowsprit Capital Corporation Limited (hereinafter the Asset Management Company), the asset management company of the First REIT. (Refer to the Investment Correlation Diagram of the First REIT and the Asset Management Company below.)
To fund the above acquisition, OUELH will raise gross proceeds of approximately 150 million Singapore Dollars by a renounceable underwritten rights issue of new shares (hereinafter the Rights Issue). ITOCHU will subscribe and pay in full for its full entitlement of the rights shares which will total up to 38,000,000 Singapore Dollars (approximately 3.1 billion Japanese Yen). OUE, which owns a 64.3% stake in OUELH, also plans to accept the Rights Issue.First REIT, the SGXs first listed Healthcare REIT, mainly incorporates the real estate of Siloam Hospitals, the No. 1 Hospital Group in the rapidly-growing private hospital market in Indonesia, into its core assets and is expanding its asset size. First REIT achieves stable income gain from these assets under a long-term contract.
OUELH will secure a stable revenue base and cash flow through these investments in First REIT and the Asset Management Company, planning to accelerate its Healthcare Business in Asia, and will consider utilizing First REIT for the asset securitization of the hospitals that OUELH develops and manages with a plan to diversify a financing source to expand its business in accordance with its asset-light growth strategy.
ITOCHU will take full advantage of its network in Asian countries to promote strategic alliances with leading local partners and utilize its experience in the Healthcare Business in Japan to form partnerships between OUELHs portfolio hospitals and Japans healthcare professionals and to introduce more efficient operational and management methods of Japanese hospitals into OUELHs portfolio hospitals. In addition, ITOCHU will pursue synergistic opportunities in the Healthcare Business with its strategic partners, the CP Group and the CITIC Group, to expand OUELHs business and value.
