Fairfax media reported this morning that Macquarie Group Ltd (ASX: MQG) was planting the $11 million dollar seeds of a future aged care business in China. Macquarie Capital, a wholly-owned subsidiary, has invested $11 million in China Senior Care, an aged care business catering to wealthy Chinese.
China's family planning or 'one-child' policy -, implemented in 1979 and intended to curb a thriving population – had the side-effect of resulting in a rapidly ageing population, with the elderly taking up an increasing percentage of the country's demographics as fewer young people were born.
According to the National Bureau of Statistics, over 20% of the Chinese population will be over the age of 65 by the year 2040, compared with 10% currently.
This provides a lucrative opportunity for aged care operators and China Senior Care intends to rapidly roll out facilities if its initial establishment (set to open in 2016) performs to expectations. Reportedly costing up to $10,000 a month to rent, it certainly looks like an attractive business proposition and a sound investment for Macquarie.
Aged care businesses like Estia Health Ltd (ASX: EHE) have performed fantastically in the Australian market, and the model is likely to be more successful in China, given its changing population demographics and the increased respect the elderly are accorded there. Although I wrote just recently that Macquarie isn't a buy right now, I continue to believe that long-term shareholders are onto a good thing.
