Warburg Pincus eyes healthcare sector in Vietnam

First Deal in the Healthcare Sector

Recently, Warburg Pincus, a leading global private investment fund, announced an investment in the Xuyen A Hospital system in Vietnam. The details of the investment amounts have not been disclosed. However, in previous transactions in Vietnam, Warburg Pincus typically invested between $100 million and $370 million.

Warburg Pincus, a leading global private investment fund, has announced its investment in the Xuyen A Hospital system in Vietnam.

Warburg Pincus is one of the world's leading private investment funds. The fund currently manages assets worth over $84 billion. The fund has over 50 years of experience investing in the healthcare sector, supporting leading healthcare corporations and hospitals in the US such as Summit Health and United Family.

Vietnam is one of the top five global investment destinations for Warburg Pincus and is currently the third largest investment destination in Asia. Since 2013, Warburg Pincus has been a pioneer in investing in Vietnam, playing a crucial role in the country's economic growth and development. The fund has invested nearly $2 billion in businesses in Vietnam, becoming the largest and most active global private equity investor in Vietnam.

The company's equity investments range from real estate to financial services and technology, including BW Industrial, a leading industrial real estate and logistics platform in Vietnam; Vincom Retail, the leading retail real estate platform in Vietnam; MoMo, the leading digital financial services platform in Vietnam; Techcombank, a leading retail franchise bank in Vietnam; Lodgis, a leading hotel platform and developer in Southeast Asia; and several other platforms.

These investment projects are just a part of Warburg Pincus's presence in Vietnam. They have played a significant role in contributing to the Vietnamese economy through investment activities, creating over 40,000 jobs across Vietnam.

Meanwhile, the Xuyen A Hospital system was founded by Dr. Nguyen Van Chau in 2014. This group owns four tertiary hospitals, mainly located in Southern Vietnam, including a leading hospital in Ho Chi Minh City. Xuyen A is continuing to expand its treatment range and focusing on specialty care. The system is building a new cancer treatment center at its hospital in Ho Chi Minh City, which will provide comprehensive services including chemotherapy, radiation therapy, and cancer surgery.

Aiming at a Potential Sector

With the rapidly growing middle class, aging population, some challenges that public hospitals face, and increasing awareness of the importance of high-quality healthcare services, opportunities have been created for foreign enterprises to enter this very promising sector of Vietnam.

According to analysts, the Vietnamese healthcare market is opening up, attracting the attention of foreign investors, partly because the market is becoming more open.

Additionally, Vietnam officially entered the "aging phase" in 2017 and is among the countries with the fastest aging populations in the world. The average lifespan of Vietnamese people is up to 75.4 years, and the elderly may account for more than 17% of Vietnam's population by 2030.

Meanwhile, traditionally in Vietnamese culture, families are very close-knit. Extended families live together for a long period, and there is an expectation that children will care for their parents in old age. At the same time, with the increasing purchasing power of the middle-class Vietnamese consumer, the ability to allocate more money to improve their parents' health is also increasing.

Moreover, the recent COVID-19 pandemic has also propelled the healthcare industry in Vietnam, highlighting some challenges that the country faces in providing adequate healthcare services. Furthermore, the overload at public hospitals is currently an urgent issue for the Vietnamese healthcare system. Many urban residents with deep pockets often go abroad for treatment. The Ministry of Health estimates that each year, more than 40,000 people spend up to $2 billion seeking treatment abroad.

For investors, acquiring private hospital systems may be seen as a way to tap into the growth potential in this sector, which can be considered part of a long-term strategy to establish a strong position in Vietnam's healthcare industry and the region.

Before the Warburg Pincus deal with the Xuyen A Hospital system, the healthcare sector in Vietnam had witnessed several high-profile transactions. The sovereign wealth fund GIC of Singapore had injected additional capital into the pediatric and maternity clinic chain Nhi Dong 315, KKR invested in the Medical Saigon Group eye care hospital chain, a deal that was reportedly completed earlier this year. In 2023, Singapore's Thomson Healthcare Group successfully acquired FV Hospital for $381.5 million, and the American healthcare group Raffles also acquired the American International Hospital for $45.6 million.

In the past, investment activities in technology, real estate, and consumer sectors have continued to attract the interest of Warburg Pincus. However, the first-time venture into the healthcare sector may reflect a range of broader motives and strategies of this giant in the very promising sector of Vietnam.