Move is to pursue healthcare investments in S-E Asia as Heliconia has a strong network and regional expertise

 

SHARES of Asian Healthcare Specialists (AHS) rose 34.8 per cent to S$0.24 on Thursday following news that it had entered a partnership with Temasek Holdings' Heliconia unit to pursue healthcare investments in South-east Asia, though some questioned if the deal was more favourable to Heliconia.

 

AHS said part of the investment will be funded with proceeds from convertible bonds it intends to issue to Heliconia, which will be converted into shares in AHS if healthcare or healthcare-related investments of more than S$10 million is undertaken, at S$0.1602 per conversion share.

 

A minority AHS shareholder, who holds some 100,000 shares, told The Business Times (BT) that the move came as a surprise to him.

 

The shareholder, who asked to remain anonymous, questioned the rationale behind the early redemption of convertible bonds issued in 2018 to Vanda 1 Investments, which is managed and controlled by Heliconia at a conversion price of S$0.25 per conversion share, only to issue new ones at a lower conversion price at S$0.1602 per share.

 

Travis Seet, chief financial officer of AHS explained that the previous convertible bonds priced at S$0.25 was out of the money and were unlikely to be converted to shares.

 

This comes as the share price of AHS was weak, in part due to the ongoing Covid-19 pandemic that has hurt global economies. The new convertible bonds, however, come with a mandatory conversion condition, ensuring bonds are converted if healthcare or healthcare-related investment of more than S$10 million is made.

 

He added that AHS' acquisition of Cornerstone Asia Health in February puts the company in a good position to look into regional investment and partnering with Heliconia, which has a strong network and regional expertise, was a strategic choice.

 

With the virus outbreak weighing on the economy, the partnership will also allow the AHS to " expand faster" .

 

Heliconia will be the one identifying investment targets given that they have the right network and resources, he said.

 

Heliconia could not be reached for comment.

 

AHS and Heliconia have formed a co-investment vehicle, Fansipan 2, with Heliconia taking a majority stake. Heliconia, through its Encyclia 1 Investments unit, will take a 76.2 per cent stake in Fansipan 2 for S$25.6 million.

 

Meanwhile, AHS, through subsidiary Salvia Ventures, will subscribe for a 23.8 per cent stake for S$8 million.

 

The market had reacted positively to the news and on strong volume with over 19.5 million shares changing hands, making it one of the most active counters on Thursday.