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Exits, Private Equity

Aier Eye Hospital Buys Out Private Equity Partners In JV Funds

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Changsha, Hunan province-based eye hospital operator Aier Eye Hospital Group plans to acquire nine hospitals owned by two funds it co-established with two Chinese private equity firms in 2014 for RMB600 million (US$87 million) in total.

Aier is essentially buying out its private equity partners, which put up small amount of their own capital and helped secure external funds for Aier to acquire hospital assets in order to expand its network.

The hospital deal is part of Aier's plan to raise RMB2.4 billion (US$348 million) in a private share placement from the company's chairman Chen Bang, who will subscribe to at least 20% of the total share offer, and other unnamed investors.

The proceeds will be used for the acquisition of the nine hospitals located in Beijing, Guangdong, Zhejiang, Shanxi, Jiangxi and Shandong province, as well as building a corporate headquarter, expanding its existing hospitals, and improving technology infrastructure at its hospitals.

After the share placement deal, Chen Bang's shareholding will decrease to 54.61%, from 58.03% previously.

In March 2014, Aier jointly launched a RMB200 million M&A fund with an investment arm owned by China Orient Asset Management in Shenzhen's Qianhai special economic zone to buy emerging eye-care technology businesses in China.

Aier committed 10% of the fund's total capital, while China Orient Asset Management unit committed 3.33% and was responsible for raising the rest.

In December that year, Aier planned another joint fund with RMB1 billion (US$160 million) with Ch-Gemstone Capital Management, also known as Zhongyu Capital, to buy eye-care hospitals.

Zhongyu committed 0.2% of the fund's total capital, and was tasked with raising 90% of the remaining commitment.

Shenzhen-listed Aier is China's largest eye hospital franchise, with over 130 hospitals and clinics around the country with annual visiting patients of over four million.


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