Ramsay Health has pulled out of a China hospital joint venture

Kevin Frayer/Getty Images

Ramsay Health Care has backed out of a joint venture to run hospitals in Sichuan Province, western China.

The idea was to capitalise on China’s large and ageing population and a growing middle class looking for better health care.

However, Australia’s biggest private hospital operator and its partner, Malaysia-based multinational Sime Darby, decided not to proceed with a proposed joint venture with Chengdu Jinxin Healthcare Investment Management Group.

In a brief statement today, Ramsay said a number of threshold conditions were not satisfied. It did not name those conditions.

A conditional contract had been signed in May last year and the Ramsay/Sime Darby partnership would have been the first international hospital operator to invest across a broad spectrum of specialty facilities in the Chinese hospital market.

The deal would have given Ramsay an effective 25% stake in a joint venture with assets including five hospitals with a total of 2,300 beds and a focus on women’s health, mental health and traditional Chinese medicine.

The investment would have cost the partnership — called Ramsay Sime Darby Health Care — $US135 million.

However, the partnership is putting together another deal, a joint venture with Jinan University No.1 Affiliated Hospital (Guangzhou Overseas Chinese Hospital) in southern China.

The Chinese government has indicated its support for the proposed joint venture.

The Ramsay Sime Darby Health Care joint venture, formed in 2013, operates three hospitals in Malaysia and three in Indonesia. It also operates a nursing and health sciences college in Malaysia.

Ramsay, which runs 212 hospitals across 5 countries, posted a 24.9% rise in half year revenue to $4.2 billion, with profit up 16.2% to $237.4 million. Almost half its revenue is generated outside Australia

Its shares last traded at $65.94.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.