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Bumrungrad makes $9.2m deal in Manila

Thai hospital firm will also manage facility

CHAROEN KITTIKANYA

In what is touted as the first overseas acquisition by a Thai health-care provider, Bumrungrad Hospital has announced plans to take a 40% stake in Manila-based Asian Hospital (AHI) for US$9.2 million.

Bumrungrad will also take over management responsibilities for the two-year-old, 258-bed hospital, according to Bumrungrad CEO Curtis Schroeder.

Bumrungrad Hospital International (BHI), the company's international unit, will acquire the shares through Manila-based Vista Medical Management and a new Philippines holding company, and will also invest up to 400 million pesos or 294 million baht in a capital increase.

The capital increase, expected to total 600 million pesos ($10.7 million) from both Bumrungrad and existing investors, will be used to reduce debt and for new technology, including the installation of the Global Care Solutions Hospital 2000 information system currently used at Bumrungrad in Bangkok.

Executives said the investment would be funded from Bumrungrad's internal cash flow, with expected benefits to be derived including dividends, management fees, software licence fees and future expansion opportunities abroad.

''Asian Hospital is an outstanding institution and Bumrungrad is proud to be a part of its very exciting future,'' said chairman Chai Sophonpanich.

''This investment is part of Bumrungrad's strategy to replicate its successful business model in Thailand through the management and acquisition of top hospitals in the Asian region.''

The AHI site includes land that will allow for the future expansion to raise bed capacity to 500. Bumrungrad has also the right to participate in any investment for expansion.

SET-listed Bumrungrad is also examining other opportunities in Southeast Asia, China and the Middle East.

Asian Hospital joins two other facilities currently under management by BHI: Pun Hliang International Hospital in Rangoon, due to open in the first quarter of next year; and Square International Hospital in Dhaka, to be opened in the second quarter of 2005.

The Manila transaction is subject to approval by AHI shareholders and various regulatory requirements, which should be completed by the end of the year.

Bumrungrad Hospital currently treats up to 900,000 patients annually, with that number to reach one million this year. Foreigners accounted for 35% of all patients but half of the hospital's total revenue.

Mainly boosted by the rise in foreign patients, Bumrungrad has reported organic growth averaging 30% over the past five consecutive years, according to Mr Schroeder. It expects similar growth this year from its 2003 revenue figure of $114 million.

Porranee Tongyen, executive vice-president of Asia Plus Securities, said that given its relatively high foreign patient base, experience treating foreign patients and international recognition, Bumrungrad might do better to expand regionally than in Thailand.

She said that without a network, stand-alone Bumrungrad seemed less competitive against Bangkok Hospital which has 13 branches.

In fact, Bumrungrad was a shareholder in Bumrungrad Hospital Rayong, but the facility closed in 2000 after just six years of operation, partly because provincial patients could not afford such a high standard of treatment.

''Because of its international recognition and preparedness in hospital management, Bumrungrad may do well in utilising its existing capacity to cater to high-end domestic customers and cash-rich foreign patients instead of competing with local hospitals,'' Ms Porranee said.

Bumrungrad is one of only 56 hospitals outside the United States, and the only one in Asia, to have been accredited by the Joint Commission on Accreditation of Healthcare Organisations (JCIA).

Bumrungrad (BH) shares closed yesterday on the SET at 17.10 baht, down 40 satang, in trade worth 38.74 million baht.

-- Bangkok Post 6 Oct

http://www.bangkokpost.com/Business/06Oct2004_biz56.php

http://money.inq7.net/columns/view_columns...10&dd=08&file=6

http://www.abs-cbnnews.com/NewsStory.aspx?...iness&OID=61045