The market for health checkups in mainland China is nearly 200 billion yuan (US$30.7 billion) a year.
Private equity (PE) firms around the world have rushed into the sector in recent years.
The latest case is the 2.7 billion yuan acquisition of CiMing Health Checkup Management Group by major industry player Meinian Onehealth Healthcare (Group) Co. Ltd.
Since 2010, a large amount of capital has been injected into the mainland health checkup industry.
Three companies gradually became the top players: CiMing, Meinian and iKang Healthcare Group Inc.
All of them are backed by PE firms, but the success of the investors varies.
CDH Investment and Shenzhen Ping’an Innovation Capital Investment invested in CiMing in 2008, with an initial public offering planned for 2010.
But, for various reasons, the process of going public dragged on for five years.
During the period when CiMing was waiting to list its shares on a mainland stock exchange, iKang raised nearly US$100 million from Goldman Sachs and GIC in 2013 and listed its shares on Nasdaq in 2014, raising a total of US$153 million.
Meinian received an investment of a combined 600 million yuan from the Carlyle Group and Pingan Insurance in 2012 and 2013.
As its competitors grew stronger with the support of the PE firms, CiMing and its investors must have been very worried.
The investors may now breathe a sigh of relief.
The market had expected Meinian to acquire CiMing after it bought a stake in the firm several years ago.
In the past decade, iKang Healthcare Group acquired iKang.com and Meinian bought Onehealth.
The health checkup market in the country has been basically “carved up” by the big players.
Privately owned healthcare checkup entities hold only a 5 percent share of the market.
I believe the PE firms are hunting for the next Meinian Onehealth, to seize the growth opportunities in the booming market.
This article appeared in the Hong Kong Economic Journal on March 24.
Translation by Myssie You
[Chinese version 中文版]
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