New Frontier Acquires United Family Healthcare from TPG for $1.44 Billion to Form China’s Largest Listed Integrated Healthcare Provider

VCBeat (WeChat ID: vcbeat) learned from New Frontier Health’s official channels that on July 30, 2019, TPG, a global leader in alternative assets, announced it would sell its stake in United Family Healthcare to New Frontier Health, aiming to create China’s largest listed integrated healthcare services company.

Under the agreement, New Frontier Health will acquire United Family Healthcare from existing shareholders such as TPG and Fosun Pharma. Following the acquisition, the company will become one of the largest listed comprehensive private healthcare service providers in China. The enterprise value of the company is estimated at approximately $1.44 billion upon completion of the transaction. After the acquisition, New Frontier Health will be renamed “New Frontier Medical Group” and will continue to dedicate itself to providing high-quality and comprehensive healthcare services in China, with future plans to achieve sustainable growth through organic expansion and strategic acquisitions.

To support the acquisition and provide working capital for the company’s future, New Frontier Health recently raised a total of $478 million in cash (held in the company’s trust account) and forward purchase commitments through an initial public offering. Subsequently, it secured additional equity subscription commitments totaling $711 million (priced at $10.00 per share) from a group of prominent investors, including Vivo Capital, Nan Fung Group, a series of strategic investors, and international asset management firms.

New Frontier Health Corporation expects that at least $565 million of the $711 million subscription commitment will be used to support this acquisition. Furthermore, investors have committed not to redeem their shares in New Frontier Health Corporation for $90 million of the cash held in the aforementioned trust account.

In this transaction, United Family Healthcare’s existing management and Fosun Pharma will retain a portion of the equity, collectively holding approximately 12% of the company’s shares upon completion of the deal. Post-transaction, Fosun Pharma, as a leading pharmaceutical and healthcare industry group in China, will continue to maintain its position as a long-term strategic shareholder of United Family Healthcare. In addition, New Frontier Health has obtained debt financing commitment letters from several banks, with lenders committing to provide up to $300 million in financing to New Frontier Health through senior term loans.

United Family Healthcare, established in 1997, has become one of the most renowned brands in China’s healthcare services industry, thanks to its long operational history and internationally standardized medical care. It operates nine hospitals (two under construction) and 14 clinics across four first-tier cities and a number of second-tier cities.The estimated operating revenue for 2019 is approximately RMB 2.5 billion.

As part of the transaction, United Family Healthcare will obtain exclusive operating rights to New Frontier Group’s hospital assets in central Shenzhen, covering a total area of 64,000 square meters. This project will strongly support the future development of United Family Healthcare’s asset-light management strategy.

In terms of revenue, United Family Healthcare has become one of the largest comprehensive private healthcare providers in China. Meanwhile, it is also one of the few private comprehensive medical institutions in China with nationwide coverage capabilities, providing lifecycle-spanning medical services centered on general practice, including primary care, family medicine, pediatrics and obstetrics, gynecology, in vitro fertilization (IVF), surgery, orthopedics, oncology, and more. Its service scope encompasses primary care, health check-ups and prevention, consultations, diagnosis, treatment, surgical services, as well as patient-centered care for chronic and acute diseases.

New Personnel Appointments Are as Follows:

Mr. Liang Jinsong, Chairman and Co-Founder of New Frontier Health Corporation, will serve as Chairman of the Company’s Board of Directors;

Roberta Lipson, Founder and CEO of United Family Healthcare, will serve as the CEO of New Frontier Health’s medical division;

Mr. Wu Qinan, Chief Executive Officer and Co-Founder of New Frontier Health Group, will lead the newly established Executive Committee of the Board of Directors, assisting in supporting and guiding management to further drive the development of United Family Healthcare.

As one of China’s largest and most brand-recognized integrated private healthcare operators, the new company will operate as New Frontier Health following the completion of the transaction and is expected to be listed on the New York Stock Exchange under the ticker symbol “NFH.”

Liang Jinsong, Co-founder and CEO of New Frontier Health Corporation and New Frontier Healthcare, stated, “We are delighted to reach this agreement with TPG and deeply appreciate the strong support TPG has provided for the development of United Family Healthcare (UFH) during its investment period, which helped the company double the number of hospitals and clinics and triple its bed capacity. Healthcare has always been a key strategic sector for New Frontier Health. We are thrilled to embark on a new journey together with UFH. We believe that, leveraging our respective successful operational and investment experience in China, we will become powerful strategic partners.”

Mr. Chen Qiyu, Chairman of Fosun Pharma and Co-President of Fosun International, stated, “Fosun Pharma is a long-term shareholder and supporter of United Family Healthcare (UFH). We are delighted to maintain our position as a strategic shareholder in UFH following this significant transaction with New Frontier Health. Fosun will continue to be committed to building an integrated ecosystem encompassing healthcare services, health insurance, and pharmaceuticals.”

Roberta Lipson, Founder and CEO of United Family Healthcare, stated, “We are deeply grateful for TPG’s support over the past five years; our partnership with TPG has been immensely beneficial. Their experience in supporting healthcare companies across Asia and globally has provided invaluable assistance to United Family Healthcare’s continued growth. At the same time, we are delighted that United Family Healthcare is returning to the public markets as the longest-established premier private healthcare provider.”

Mr. Wu Qinan, Co-founder and CEO of New Frontier Health Corporation, stated, “We will work closely with the management team to further drive business development, building on United Family Healthcare’s (UFH) success. Our existing healthcare portfolio complements UFH’s mature operations, unlocking potential for synergistic value creation. I am confident that together we can build a more robust healthcare service platform and accelerate UFH’s expansion in the Chinese market. We also believe that Ms. Li Bijin and the current management team share many of our values and vision. As one team, we will collaborate closely to lead UFH to even greater achievements.”

TPG, the seller of United Family Healthcare, was founded in 1992 and is a global leading alternative asset management firm with over $108 billion in assets under management. TPG’s investment platform spans multiple asset classes, including private equity, growth funds, real estate, credit, and public equities. Commenting on the transaction, Yue Chen, Partner at TPG Asia Capital, stated: “There is substantial demand for high-quality private healthcare in China, and United Family Healthcare’s market positioning is well-suited to meet this growing need, which was the original rationale behind our investment. Over the past five years, United Family Healthcare has achieved remarkable success clinically, operationally, and commercially, expanding its footprint and customer base across China. We are very proud of what we have accomplished together. We believe that New Frontier Health will elevate United Family Healthcare to new heights, ensuring its continued prosperity. We have enjoyed a productive partnership with the United Family Healthcare team and wish them every success in the future.”