OUE Lippo Healthcare: China joint venture to manage 3 China Merchants medical facilities

China yuan coins

China Merchants Lippo Hospital Management (Shenzhen), or CMLHM, a 50:50 joint venture between China Merchants Group and OUE Lippo Healthcare (OUELH), has entered agreements to manage three of CMG’s medical facilities, OUELH said on Sunday.

Under the agreement, CMLHM will manage the facilities for a year, starting from 1 February, with the potential for a one-year extension, it said in a filing to SGX on Sunday.

The management fee will be equivalent to 5 percent of each facility’s annual revenue for the fiscal year, it said.

After the facilities complete a regulatory restructuring during the management period, CMLHM will have the right to acquire an interest in the facilities’ business, the filing said.

The three facilities are located in Shanghai, Chongqing and Nanjing, and are called Shanghai Changhang Hospital, Chongqing Changhang Hospital and Nanjing Youyun Hospital, respectively, it said.

In the filing, OUE Lippo Healthcare pointed to double-digit growth rates for China’s healthcare market, saying it was the fastest growing healthcare market among large emerging economies.

“Given strong government initiatives, and a rapidly growing demand for quality and specialized healthcare services, the Chinese healthcare sector presents vast opportunities for multinational healthcare operators like OUELH,” the statement said.

It cited 2015 World Health Organisation data projecting healthcare expenditure on the mainland would grow to US$1.1 trillion by 2020 from around US$594 billion in 2015.

CMLHM is a joint venture between OUELH’s wholly owned subsidiary Lippo Healthcare and China Merchants Landmark (Shenzhen), or CMSZ, which is a subsidiary of Shenzhen-listed China Merchants Shekou Industrial Zone Holdings, or CMSK, and part of CMG, it said.

Earlier this month, OUE Lippo Healthcare entered a deal with CMSK to develop and operate a high-end international hospital in Prince Bay, Shenzhen, in China.

CMSK is involved in industrial park and community development and management, and cruise infrastructure development and management.

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