SINGAPORE (Dec 2): OUE Lippo Healthcare (OUELH) announced Monday it has entered into a share subscription agreement to jointly develop, operate and manage a high-end international hospital in Prince Bay, Shenzhen with China Merchants Group for RMB126.3 million ($24.6 million).

OUELH says the project is expected to deepen the group's collaboration with China’s Hong Kong-based state-owned conglomerate.

Under the share subscription agreement, OUELH will pay RMB126.3 million for a 50% stake in Riviera Quad International, which wholly-owns Lekang Assets (Shenzhen) Co.

Lekang, in turn, owns the land use rights of a 6246.75 sqm land parcel located at Prince Bay, where the proposed hospital project will be developed. The land use rights are granted for a term of 50 years, effective until Dec 25, 2066.

The consideration was arrived at after arm's length negotiations and was on a willing-buyer willing-seller basis, taking into account various factors, including the market value of the land parcel, and the business prospects of Riviera Quad International.

The consideration will be funded through external borrowings.

The subscription is not expected to have any material effect on OUELH’s earnings per share, net tangible assets per share and gearing in the current financial year ending Dec 31, 2019.

The hospital project is expected to have more than 200 beds and is set to benefit from the growth of the medical tourism industry in the Guangdong-Hong Kong-Macao Greater Bay Area.

The Greater Bay Area has been earmarked by the Chinese government to be the main driver of economic growth and international trade, and a key player in China’s “Belt and Road Initiative”.

OUELH says the hospital project will also enable the group to capture other healthcare opportunities in China with the partnership.

As at 4.49pm, shares in OUELH are trading 0.1 cent lower, or down 1.8%, at 5.6 cents.