Local healthcare industry excites foreign investors

Quadria Capital, an independent, healthcare-focused private equity firm, has successfully acquired stake in French-invested FV Hospital in Vietnam.

The investment will be used to develop diagnostic and treatment centres for a select set of specialities. It also aims to provide citizens of central and southern Vietnam access to advanced care and treatment.

FV Hospital will use this investment capital in a multi-phase strategy. In phase one, it will pour at least US$10 million into developing its network in the next six-to-12 months.

By the end of 2017, a new clinic is slated to open in the Mekong Delta city of Can Tho to ease overloaded hospitals in surrounding cities. After five years, FV plans to open eight-to-10 new centres across the country.

Managing partner and co-founder of Quadria Capital Abrar Mir refused to disclose the investment capital and its overall stake in FV Hospital. He did, however, confirm that the investment sweet spot for the fund is US$40-100 million and that it generally buys 25-26% of stake in its portfolio companies.

Many other foreign investors have also shown interest in the healthcare sector in Vietnam.

Last week, CPG Group from Singapore said it wants to build a high-class hospital with around 150 beds in the south-central Binh Dinh Province’s Quy Nhon City.

The group wants to cooperate with Binh Dinh in medical personal training in order to develop Quy Nhon into a destination for healthcare tourism.

In May, the Singapore-Vietnam Cancer Centre, owned and managed by Vietnam Integrated Medical Services (VIMS), also opened its doors to serve the community in Vietnam. VIMS chairman Eng Aik Meng said that the private healthcare sector has grown over the years, but there remains room for private healthcare providers to operate in Vietnam.

He said the outlook for foreign investors in the healthcare sector is positive for the following reasons. First, Vietnam’s population is ageing quickly, with 10% at or above the age of 60 in 2017 – in 15-20 years, the elderly will account for one-third of the total population.

Second, the rapid urbanization is stimulating demand for quality healthcare within Vietnam. Last but not least, overcrowding in government hospitals is expected to intensify, resulting in long wait times and a shortage of beds.

According to BMI Research, expenditures on healthcare and pharmaceuticals accelerated in 2016. In the healthcare segment, expenditures reached US$14.9 billion in 2016, higher than the 2015 figure of US$13.9 billion.

The recent Vietnam Private Equity report by Grant Thornton shows that in Vietnam, healthcare and pharmaceuticals ranked third in terms of industry attractiveness for investors, which was voted by 38% of participants as “very attractive”.

“The demand for healthcare and safety has been increasing in line with customer’s awareness of health problems. Thus, the call for multinational businesses providing health related services are critical with the need for long-term investment,” said the report.