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A healthy new alliance for Ramsay Health Care

In search of expansion and further acquisitions in Asia, Australia’s largest private hospital operator, Ramsay Health Care Limited (ASX: RHC), will team up with Asian group Sime Darby to manage their health care assets in Asia.

Ramsay will purchase 50% of Ramsay Sime Darby Health Care for $120 million, as well as through its Indonesian assets – a deal which the Australian Financial Review has estimated will be worth a total of $500 million.

Ramsay Health has had a very healthy recent few years with shares having gained 15% already this year, adding to the 41% they gained last year. Whilst its HY12 report recognised a 5.1% gain in revenue however, this amount was the lowest percentage of revenue expansion in six consecutive half-year periods for the company.

Ramsay’s Chief Executive Officer, Chris Rex, has stated that the new joint venture will provide the company with a great opportunity of expansion and further acquisitions in Asia – helping it to enter new markets and strengthen its core business.

With a growing middle class and aging population, Asia presents as a very attractive market to provide healthcare. Ramsay’s healthcare expertise will go hand-in-hand with Sime Darby, which has “extensive experience in the Asian marketplace”.

Whilst the deal is still subject to regulatory approval, the joint venture is expected to be approved by the beginning of the new financial year.

Ramsay isn’t the only health care company to have dominated the market over recent times. Primary Health Care Limited (ASX: PRY) and Resmed Inc. (ASX: RMD) have also become contagious over many investor’s portfolios, having gained 79% and 44% respectively.

Foolish takeaway

The opportunities presented in Indonesia are rapidly making the nation “one of the world’s most important health-care markets”. The nation’s government has recognised the need to increase the national number of hospital beds by 30%. Should the deal go ahead, Ramsay’s could see great expansion opportunities, which would be a wonderful remedy to any investor’s portfolio.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Ryan Newman does not own any shares in the companies mentioned. 

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