Perennial injects capital in Shanghai's largest eldercare services operator

Total deal consideration sits at $148 million.

As it continues to explore healthcare real estate, Perennial Real Estate Holdings Ltd. has entered into an investment agreement to acquire an equity interest of 49.9% in Shanghai RST Chinese Medical Co. Ltd. via capital injection into Renshoutang.

As one of the pioneer and most established private integrated elder-care companies in China, Renshoutang currently operates a portfolio of 11 eldercare facilities, with over 2,400 beds, and four pharmacies, each with a dedicated traditional Chinese medicine clinic, and all of which are located predominantly in Changning District in Shanghai.

Upon the completion of the transaction, the Perennial will be the largest single shareholder of Renshoutang. It would become an associated company of the group and would contribute a new stream of recurring income.

The deal was worth $148 million (RMB 735.5 million). The capital injected to the eldercare operator will be mainly used for the acquisition of new projects, and a small part of which will be used to upgrade Renshoutang’s existing portfolio of facilities.

The group said in a statement that they would fund the transaction through internal funds and external borrowings.

Perennial CEO Pua Seck Guan said this investment strengthens the group's asset-light strategy to drive steady long term income.

"The acquisition of Renshoutang allows us to leverage on its established platform, value add to further elevate its business and operations standards, and subsequently scale the business to become the largest eldercare services operator in the Yangtze River Delta Region to meet the rising demand for integrated medical and eldercare driven by China’s aging population," he said.