Japan's Mitsui Makes $2 Billion Bet on Asian Hospital Growth

(Bloomberg) -- Mitsui & Co. will pay $2 billion to become the largest shareholder in IHH Healthcare Bhd, in a bid by the Japanese trading house to tap the rapid growth of Asia’s hospital business as it diversifies from the tumultuous commodities market.

• Mitsui said it is increasing its holding in the world’s third-biggest listed health-care operator to about 33 percent. Mitsui is buying the shares from investment company Khazanah Nasional Bhd, currently IHH’s largest shareholder.

Key Insights

• Asia’s private hospital operators have been expanding to meet the demands of affluent consumers looking for better medical care. India and China still face a shortage of hospital beds and doctors. The region’s health-care industry is seen growing 13 percent to $517 billion this year.
• Japan’s trading companies have been looking for new business opportunities outside of the traditional commodity market, which can lead to large losses if there is a drop in spot prices. Mitsui had targeted health-care services in its mid-term plan as one of the growth markets.
• Malaysia has sought to sell holdings in “non-critical, non-strategic” assets to help curb a budget deficit that’s set to widen to the largest in five years, Finance Minister Lim Guan Eng said in August. The country has looked to do so through state companies such as Khazanah.

Market Reaction

• Mitsui shares climbed as much as 1.6 percent in early Tokyo trading Thursday. The stock has tumbled 16 percent from a 10-year peak reached in October. IHH shares jumped as much as 10 percent in Kuala Lumpur.

Get More

• IHH operates 50 hospitals with a total of over 12,000 beds in nine countries, including Singapore, Malaysia, Turkey, and India. In July, IHH agreed to take control of Fortis Healthcare Ltd., India’s second-largest hospital chain.
• Get Mitsui’s statement here.
• Get Khazanah’s statement here.

To contact the reporters on this story: Stephen Stapczynski in Tokyo at sstapczynsk1@bloomberg.net;Yudith Ho in Kuala Lumpur at yho35@bloomberg.net

To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Jeff Sutherland

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