Bain Capital acquires Chinese hospitals

The US private equity firm has made the first investment from its $3bn pan-Asian fund III in China’s healthcare sector.

Bain Capital, the Boston-based buyout group, has made its first investment in China’s healthcare sector in a bid to capitalise on growing demand for quality healthcare among the country's rising middle class. 

The firm will acquire a large majority stake in Asia Pacific Medical Group, a private hospital group in China, from existing shareholders, it said in a statement. 

Although no further financial details were disclosed, sources with knowledge of the matter told Infrastructure Investor that Bain has committed $150 million to the acquisition, as well as funds for future expansion. 

The capital comes from Bain Capital’s $2.3 billion Asia Fund II and $3 billion Asia Fund III, which reached its final close last December, sources said. This is also the first deal the third fund has made. 

Established in 1992, APMG is a medical services provider founded by Chinese entrepreneur Michael Choy and a group of US-based physicians and surgeons. With a portfolio of five hospitals and a number of clinics in China and Southeast Asia, the group plans to use Bain's capital injection to expand its foothold in China’s tier-one cities. 

Huge and rising demand for healthcare in China is exerting great pressure on the under-resourced state medical system. In 2014, China passed reforms to open up the market to foreign investment in a bid to bring international-standard healthcare services in the country. 

“As one of the leading private healthcare companies in China, APMG is able to provide patients with quicker and affordable access to professional treatment”, said Jonathan Zhu, a managing director at Bain Capital. 

“Bain Capital’s long history of working with healthcare businesses and proven operational model will help enhance APMG’s leading position as a premium healthcare provider, particularly in the supply constrained neurology and oncology treatment market.”

The deal marks Bain Capital’s debut investment in China’s healthcare sector. The firm has been investing in healthcare companies globally and now manages about $75 billion across asset classes.