[SINGAPORE] SeaTown Holdings, an investment manager indirectly owned by Temasek, said on Wednesday (May 21) it is committing up to S$115 million in Singapore healthcare and life sciences firm AddVita.
Offering medical and laboratory technologies, AddVita sells pharmaceutical products as well, to hospitals, clinics, pharmacies and healthcare providers throughout Asia, particularly South-east Asia.
It also buys companies, focusing on small and medium-sized distributors in the healthcare and life sciences sectors, using the so-called buy-and-build strategy.
As a sector, healthcare’s appeal lies in being resilient and able to weather economic downturns. In South-east Asia, he said there’s “very strong” growth potential for healthcare due to rising wealth and growing awareness within the region of the importance of good health.
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However, as the region is diverse, it’s important to build a platform for businesses where they can keep operating with a fair amount of autonomy.
This is important to SeaTown as the freedom can preserve “the entrepreneurial culture that made these businesses successful in the first place”.
SeaTown last announced an investment in healthcare in March 2023, when it pumped in S$150 million to establish a new Singapore-based medical group, Foundation Healthcare Holdings (FHH). Comprising 50 medical specialists across 13 areas of expertise, FHH’s pro forma revenue was estimated to exceed S$130 million, making it one of Singapore’s largest private healthcare groups, SeaTown said then. It declined to provide the latest figures.
With the AddVita investment, SeaTown is close to fully deploying its private capital master fund of over US$1 billion, Loo said, declining to reveal how much is left. Set up in 2021, the fund is in its last year of investment period.
Defensive sector
Often viewed as a defensive sector that can withstand the ups and downs of economic cycles, healthcare has been steadily drawing more private investments. According to a Bain report, global private equity deal activity in the sector surged last year, to an estimated US$115 billion – the second-highest annual deal value on record. Bain added that private equity firms continue to invest in healthcare in the Asia-Pacific, where deal values have been steadily rising since 2016.
For example, Warburg Pincus and CVC are reportedly vying to buy a stake in Metro Pacific Hospital Holdings, the biggest private hospital group in the Philippines, from KKR and Singapore sovereign wealth fund GIC. BT understands the sale hasn’t been completed.
GIC itself said in December it would be injecting an extra US$150 million in Asia Healthcare Holdings, a healthcare delivery platform from South Asia. This follows its first investment of US$170 million in the platform in 2022. Global real estate manager CapitaLand Investment launched a S$350 million wellness fund with Thai property developer Pruksa in late 2023 to focus on healthcare related property.
To stand out amid the competition, Loo said it is important for fund managers such as SeaTown to show they can add value to the companies.
“For many years now, there is a fair amount of capital chasing assets in South-east Asia….It’s not just what the price that you pay, or how much you’re prepared to pay. More importantly, business owners are getting more sophisticated. They see private equity not just as a form of capital, but partners that they can work with to help them grow their business, to help them achieve their aspiration as well.”
To do so, Loo said that SeaTown has a dedicated team to work with its partners and portfolio companies.
On the investment climate in South-east Asia, which is in the cross-hairs of tariffs imposed by the US, Loo said SeaTown is “fully alive to the risk” that businesses could slow should the region’s economic growth be hit.
President Donald Trump announced “reciprocal” tariffs of up to 49 per cent for South-east Asia on Apr 2, which he subsequently paused for 90 days. But the region’s exporters face a double whammy – apart from the looming end to the pause in July, their currencies have also risen against the US dollar, making their products more expensive in international markets.
Given South-east Asia is the focus of the SeaTown Private Capital Master Fund, Loo and his team are looking into sectors that are vital, apart from healthcare. This is to protect the fund against any downside caused by the tariffs.
“The way we’ve thought about this is that there are mission critical services that are similar to healthcare, that will continue to be resilient,” he said. One example is software services in the business services space, another sector the fund has invested in.
