Malaysian state-backed Ekuinas nabs first healthcare deals

Ekuinas plans to merge Express Group and PM Care to create the largest medical claims provider in Malaysia.

Malaysian government-backed private equity firm Ekuiti Nasional Berhad has made its first foray into the healthcare sector investing MYR 79.8 million ($18.1 million; €16.1 million) in two third-party medical claims administrators (TPAs).

The firm has acquired 60 percent of the Express Group, which consists of MediExpress and Health Connect, and a 60 percent stake in PM Care, it said in a statement.

The two companies will later be merged under one holding company to create the largest TPA provider in Malaysia with 40 percent market share and servicing more than 2 million members, the firm said.

“The TPA industry is a fast growing healthcare subsector – the domestic market is currently estimated at MYR 100 million and expected to grow by 10 percent per annum to reach an estimated MYR 156 million by 2019, backed by the growth in health insurance market for private and corporate companies,” a spokesperson for Ekuinas told Private Equity International.

MediExpress provides TPA services to insurance companies and small medium enterprises. The group now has more than one million members across an extensive health provider network of over 3,000 clinics and 150 hospitals. PMCare focuses on corporate clients and caters to over 600,000 members across more than 3,000 medical providers nationwide.

The transaction was structured through Ekuinas Direct Tranche III Fund, a 2014-vintage, MYR 1.5 billion vehicle, making it the largest of Ekuinas’ five funds to date.

Ekuinas was established in 2009 to boost bumiputera (native Malays) participation in the local economy. The firm received a government endowment of MYR 5 billion under Malaysia’s new economic plans and an additional MYR 400 million for 2016.

It invests in medium-sized companies in Malaysia through direct investments and co-investments with Navis Capital Partners, CIMB Private Equity and TAEL Partners. Its investments are mainly in oil and gas, services, education, retail & leisure, fast moving consumer goods and healthcare sectors.

Among its current plans, Ekuinas is looking to list education company Ilmu Education Group which it acquired in 2010 for MYR 102 million.

In December, the firm sold its 90 percent stake in Lyndarahim Ventures, San Francisco Coffee’s holding company, to Platinum Appreciation and Brothers Coffee Venture for MYR 24 million.

According to the firm’s 2014 annual report, Fund I recorded a gross portfolio return of MYR 677.1 million out of which MYR 371.9 million has been realised. Meanwhile, Fund II has generated a gross portfolio return of MYR 148.4 million, translating to a net IRR of 19.3 percent per annum.

Ekuinas’ chief executive officer Abdul Rahman Ahmad who has served since the firm’s inception in 2009, will be retiring in February, according to a statement. He will be replaced by managing partner Syed Yasir Arafat Syed Abd Kadir in March.