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Glove maker UG Healthcare to operate active retirement homes

 

GLOVE manufacturer and distributor UG Healthcare : 8K7 +1.13% will diversify from its existing business to operate active retirement homes in Malaysia, as well as healthcare and wellness businesses.

 

In its bourse filing on Oct 14, UG Healthcare said that the company will leverage on established strategic players through a joint venture consortium which intends to begin building active retirement homes in Malaysia. 

 

These homes will be located 21 km south of Desaru Coast Ferry Terminal, a 90-minute ferry ride from Tanah Merah Ferry Terminal.

 

The venture will be done through the acquisition of 100 per cent of Indigo Teguh& rsquo s share capital for RM100 (S$30.29).

 

Indigo Teguh is a private limited investment holding company that has UG Healthcare& rsquo s chief executive and executive director Lee Keck Keong as its sole shareholder and director. The company was incorporated in Malaysia on Apr 20, 2022. 

 

The joint venture consortium will consist of Lumayan Sejati, Lumayan Active Life (LAL) and Indigo Teguh. 

 

The shares of the joint venture entity for the development and management of the active retirement home project will be split between LAL and Indigo Teguh, with the two holding companies 65 per cent and 35 per cent of shares respectively.

 

As for the joint venture entity for the development and management of the healthcare project, LAL, Indigo Teguh and Lee will hold 30 per cent, 55 per cent and 15 per cent of shares respectively. 

 

Syed Muhammad Bin Tun Syed Nasir is a common director and shareholder of both Lumayan and LAL. Other directors of Lumayan include Noor Saadah Binti Abdul Hamid and Mohd Zainudin Bin Mat Amin, while Khoo Lay Wah is the second director of LAL.

 

In addition, Indigo Teguh has agreed to provide RM33.3 million in funding to Lumayan Sejati to acquire certain pieces of freehold Malay reserved land to build the active retirement homes from Ascolte, a private limited company in Malaysia. Lumayan will pay a land purchase price of RM37 million. 

 

As the RM33.3 million funding represents 4.5 per cent of UG Healthcare& rsquo s latest audited net tangible assets as at Jun 30, 2022, shareholders& rsquo approval for the proposed acquisition of Indigo Teguh and the funding of the balance land purchase price is not required.

 

However, because the proposed new business differs substantially from the company& rsquo s existing business and could change the risk profile of the group, the proposed diversification will be put to a vote at an extraordinary general meeting which will be announced in due course, the company said. 

 

The group sees the proposed diversification as a way to generate additional and recurrent revenue streams, which could enhance shareholder value over the long term.

 

Furthermore, it believes that there is increasing demand for good retirement facilities, healthcare and wellness services as Asia& rsquo s population ages.

 

  Moreover, the active eldercare and healthcare industry is a comparatively stable market, largely independent of cyclical business and market fluctuations. 

 

The diversification of the group into the proposed new business is therefore part of its strategy to minimise risks from such fluctuations,& rdquo the company said.