PwC says hospital sector was new focus of China’s M&A activity in 2015

BEIJING - A new report by PricewaterhouseCoopers says mergers and acquisitions in China’s hospital sector became a new focus in 2015, with large-scale deals and more cross-border transactions likely to be made in the near future. There were 48 mergers and acquisitions of Chinese hospitals last year, of which 27 were general hospitals. Disclosed investment totalled RMB 3.98 billion (US$612.1 million).

In contrast, the disclosed value for specialised hospitals fell sharply in 2015 compared to 2014. The Leader of PwC’s northern China transaction services and healthcare industry, Leon Qian, said investors were “previously attracted to specialised hospitals”, especially dental, obstetric and paediatric hospitals, as they had low risk and could be easily replicated and enlarged to generate profits.

“However,” he said, “with more capital flowing in, such targets [specialised hospitals] had become scarce, which led to a dramatic drop in investment in 2015. Also in 2015, general hospitals became the main focus of investment as they yielded stable cash flows and tended to offer the most benefit for new funding.”

The report also showed that there has been a rise in investment activity in public hospitals, with their total disclosed deal value reaching RMB 844 million in 2015. Investment in private hospitals reached a record high in 2014 in both the volume and value. However, in 2015, the deal value plunged to RMB 3.94 billion, largely because of fewer deals associated with specialised hospitals. www.webershandwick.cn (ATI).