China: New Frontier Corporation to acquire United Family Healthcare

In a move that could shake up the private healthcare sector in China, New Frontier Corporation is to acquire United Family Healthcare from private equity firm TPG and Shanghai Fosun Pharmaceutical for US$1.4bn and then float it on the NYSE.

United Family Healthcare is one of the largest premium private healthcare operators in the country. Founded in 1997, it operates nine hospitals (two of which are under construction) and 14 clinics in all four first tier cities and a number of second tier cities.

Revenues for this year are expected to be around Rmb2.5bn (US$360m).

New Frontier is a Hong Kong-based special purpose acquisition company (SPAC) which is headed by quondam finance secretary Antony Leung along with a team of ex-Blackstone Group stars. Chief executive Carl Wu, for example, is best-known for having set up Blackstone’s first renminbi investment fund.

In June last year it IPOed on the NYSE exchange in the US.

To fund the acquisition, in addition to the US$478m raised when it floated and through forward purchase commitments obtained at the time, New Frontier said that it has obtained an additional US$711m in equity commitments from investors that include Vivo Capital and Nan Fung Group. It has also signed a US$300m senior term loan facility.

Credit Suisse and UBS are serving as capital markets advisors with Winston & Strawn, Simpson Thacher & Bartlett, Kirkland & Ellis, and Global Law Office acting as legal advisors to New Frontier. Paul Hastings is legal adviser to Fosun Pharma, and Hughes Hubbard & Reed is legal adviser to Roberta Lipson, the founder and chief executive of United Family Healthcare.