LAST year, Dymon Asia Private Equity (DAPE) exited Asia Integrated Facility Solutions Pte Ltd (AIFS) via a deal with UEM EDGENTA BHD.
UEM Edgenta, a total asset solutions provider, bought the Singapore-based facilities management company for S$185.9mil (RM563mil) cash. Shareholders approved the deal last December.
The deal turns UEM Edgenta into a regional player in providing healthcare support and facilities services for various hospitals, clinics and health institutions in Malaysia, Singapore and Taiwan.
“The proposed acquisition not only allows UEM Edgenta to have a leading position in Malaysia’s private healthcare sector, but we are also able to immediately establish our regional healthcare services presence in Singapore and Taiwan,” said UEM Edgenta managing director/chief executive officer Azmir Merican in a statement when the deal was announced.
Meanwhile, Singapore-based AIFS is the holding company of UEMS Pte Ltd, a facilities management provider with a track record of over 25 years. It is servicing over 90 hospitals and healthcare institutions in the republic, Taiwan and Malaysia, with a total of 26,000 beds.
Azmir had said that over the next five years, UEMS’ growth strategy included expansion into other South-East Asian countries including Indonesia and Cambodia.
UEM Edgenta expects its group revenue to increase by 20% in 2017 because of this acquisition. The acquisition will contribute an additional RM310mil to the current contribution of RM350mil from the healthcare sector.
DAPE partner Tan Chow Yin said that his partner and Gerald Chiu, led the AIFS investment. It took them about nine months to pursue and close the deal.
Post-closing, the team immediately got down to work on several key areas, executing over a period of two intense years.
“Organisationally, we immediately started working on implementing share and variable compensation schemes. The cash bonus pool for employees was doubled compared with the previous one. Senior management were also given the option to buy-in alongside us, which they did,” Tan adds.
They realised that they needed to improve productivity and started tracking the average walking speed and distance of the portering staff.
“Over time, we were able to reduce their inefficiencies and labour costs held steady while revenues grew, which resulted in a substantial increase in a more than doubling of earnings.
“Thirdly, we got down to work on stakeholder alignment.
We bought out a minority shareholder that had previously held the rights of first refusal on future share sale.
We also terminated an out-dated franchisee agreement by engaging with the franchisor,” he says.
Without these initiatives, the company’s earnings wouldn’t have grown so quickly and the company wouldn’t have been so attractive with the various stakeholder impediments.
“We had many offers for the business and ultimately chose the buyer that we believe will provide the best home for the existing team to grow.”