Healthcare Management Partners Inc., a venture between Mitsubishi Corp. and Development Bank of Japan Inc., may plan a second fund on expectations that demand for medical services will rise in the world’s most rapidly aging nation.
The joint venture may start the new health care fund once the investing period for its first fund is over in March, said Hiroshi Murayama, chief executive officer of the Tokyo-based firm. It may invest in properties, mezzanine (a hybrid of debt and equity financing) and distressed debt of hospitals in Japan, he said, declining to elaborate because details have yet to be determined.
The venture aims to profit in a market where spending on medical and nursing care is estimated to increase about 70 percent by 2025, according to government data. The fund provides financing for hospitals struggling to raise capital to rebuild facilities and replace old equipment, Murayama said.
“We would like to start thinking about our new fund next year, as there is ample demand,” Murayama said in an interview Tuesday. “We are targeting hospitals that are in need for financing. This is quite a niche market.”
The company’s first fund, Trinity Healthcare Fund, was set up in 2007 to revitalize hospitals in Japan through real estate securitization, buying distressed debt and improving balance sheets, according to the venture. Mitsubishi is Japan’s biggest trading company and Development Bank is a government-run lender.
The fund, with ¥20 billion in capital and 60 percent of leverage, has turned unprofitable hospitals around by cutting labor and equipment costs and adjusting the usage of hospital beds more efficiently by reducing hospital stays, Murayama said.
Trinity fund has so far helped improve the balance sheet of more than half a dozen of hospitals, Murayama said. The 10-year fund, which targets an internal rate of return of more than 10 percent, will end in 2017, he said.
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