Author Archives: FortmanCline

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Foreign equities keen on PH healthcare industry

Corporate finance consulting firm Fortman Cline said foreign funds are keen to invest in the Philippine healthcare industry amid its ongoing consolidation.

Francis Del Val, Fortman Cline managing director, said private equities from around the world – Asia, United States and Europe – are “very much excited to participate in the growth story of the Philippines” as they see a “sweet spot” in the healthcare industry.

“As we know, there are already quite a number of large conglomerates in the Philippines.

And naturally, they want to expand their footprint across different industry sub-sectors. But equally, there’s foreign capital from overseas that is seeing the promise of a healthcare that continues to expand. So they want to work with the middle market. They want to work with entrepreneurs who have built successful businesses so that they can scale and they can move up to be a national player, perhaps even a regional player,” said Del Val.

Thus, he noted the formation of alliances in the “highly fragmented” healthcare industry, “creating integrated ecosystems among industry players.”

Del Val said the industry is poised for further growth against the backdrop of an estimated P1.16 trillion spending in the sector, which continues to grow and has posted 15 percent growth as of 2021.

“That’s a lot of of money that is being spent on building hospitals, or renovating hospitals, or being able to pay for claims, both from HMOs (health maintenance organizations), private sector as well as the public sector. And we are just at the beginning,” he said.

Del Val noted that the local healthcare industry is still highly-fragmented with multiple brand leaders across various sectors: medical supplies distributors, pharmaceutical firms, hospitals, diagnostic centers, retail pharmacies, retail medical device/equipment suppliers and HMOs.

“Thus, consolidations and alliances are seen to emerge to allow the industry to become more efficient, respond faster to emerging trends in the healthcare industry as well as to the impact of the Universal Health Care (UHC) which was signed into law in 2019,” he added.

As the consumer-driven Philippine economy grows, a bigger middle class with higher purchasing power and increasingly sophisticated preferences is being created nationwide, particularly in highly urbanized cities, Del Val pointed out.

“The affluent down to the growing upper middle class is seen to patronize private healthcare providers while the lower socio-economic class is given greater access to healthcare by the government because of the UHC,” he said.

“UHC implementation will increase competition between private and public sector by providing options. As the government increases investments, private hospitals that do not invest may not be able to keep up,” he added.

According to Del Val, competition will continue to increase between the private and public sectors over already scarce human resources.

“Rising administration costs and competition from the public sector will force smaller hospitals to consolidate with bigger ‘megabrand’ hospitals to survive,” he said.

Citing Department of Health (DOH) data, Del Val said there are 1,071 private hospitals and 721 public hospitals, with 70 of the public hospitals being operated by the DOH. – Ruelle Castro

Source: Foreign equities keen on PH healthcare industry (malaya.com.ph)

PH’s P1.5-T healthcare industry is ripe for M&As

The P1.5 trillion (from P1.16 trillion in 2021) Philippine healthcare industry is open to a lot of opportunities for mergers and acquisitions (M&A) as it is presently highly fragmented with multiple brand leaders across various sectors.

In a media roundtable, boutique corporate finance advisory and consulting firm Fortman Cline Capital Markets (FCCM) sees an interplay of consolidation, formation of alliances, and creating integrated ecosystems among industry players.

FCCM was recently named the Best Mergers and Acquisitions (M&A) Advisory Team in Southeast Asia for 2023 by Capital Finance International (CFI). It has also been ranked as one of the top M&A firms in the Philippines by Bloomberg and in Southeast Asia by Thomson Reuters. 

In the Philippines, FCCM acted as one of the two financial advisers of Professional Services Inc. (PSI), the company that owns The Medical City (TMC), as it recently sealed the deal with Luxembourg-based CVC Capital Partners. 

FCCM also advised Mang Inasal Philippines Inc. on its sale of a 70 percent stake to Jollibee Foods Corporation, and the SM Group’s All First Equity Holdings on its acquisition of a 60 percent equity stake in Philippine Geothermal Production Company, Inc. from Chevron Geothermal Philippines Holdings, LLC (USA).

Fortman Cline Management Services (FCMS) Managing Director Francis Del Val

“The winners will be those that provide the most service-oriented patient experience that delivers optimal health outcomes at the most reasonable or affordable price,” said Fortman Cline Management Services (FCMS) Managing Director Francis Del Val. FCMS is a new unit under Fortman Cline.

He noted that the local healthcare industry is still highly fragmented with multiple brand leaders across various sectors: medical supplies distributors, pharmaceutical firms, hospitals, diagnostic centers, retail pharmacies, retail medical device/equipment suppliers, and health maintenance organizations (HMOs).

“Thus, consolidations and alliances are seen to emerge to allow the industry to become more efficient, respond faster to emerging trends in the healthcare industry as well as to the impact of the Universal Health Care (UHC) which was signed into law in 2019,” Del Val said.

As the consumer-driven Philippine economy grows, a bigger middle class with higher purchasing power and increasingly sophisticated preferences is being created nationwide, particularly in highly urbanized cities.

The affluent down to the growing upper middle class is seen to patronize private healthcare providers while the lower socio-economic class is given greater access to healthcare by the government because of the UHC.

“UHC implementation will increase competition between private and public sector by providing options. As the government increases investments, private hospitals that do not invest, may not be able to keep up,” Del Val said.

He added that, “Competition will continue to increase between the private and public sectors over already scarce human resources. Rising administration costs and competition from the public sector will force smaller hospitals to consolidate with bigger ‘megabrand’ hospitals to survive,” Del Val added.

However, he pointed out that, “While the UHC will provide access to public healthcare facilities, these will be limited by capacity constraints and patient experience.”

“There will be opportunities for the private sector to be seen as the trusted partners of local government units (LGUs) who will primarily be implementing the UHC as they may not always have the expertise nor the trained staff to succeed.  Collaboration between private and public sector is key to move the UHC agenda forward,” Del Val said.

Aside from the growing middle class and the impact of the UHC, the local healthcare industry also has the potential to grow further through medical tourism.

“Medical tourism could be a game changer. The Philippines can position itself as the go-to surgical and recovery center for patients with overseas insurance and expensive local medical costs, not to mention long waiting lines in their home countries,” said Del Val.

Proximity and historical-cultural relations are drivers of where medical tourists go, he said noting that, the Philippines has an opportunity to attract medical tourists from higher-income.

Source: PH’s P1.5-T healthcare industry is ripe for M&As (mb.com.ph)

Fortman Cline Declared Best M&A Advisory Team in Southeast Asia

Winning Team. (Left to right) Fortman Cline Management team members Francis S. Del Val, Clarisse T. Tan, Michael C. Tiutan, Daniel D. Ibasco, and Gary P. Cheng.

MANILA, Philippines – Fortman Cline Capital Markets (FCCM) was recently named the Best Mergers and Acquisitions (M&A) Advisory Team in Southeast Asia for 2023 by Capital Finance International (CFI), a premier London-based print journal and online resource for business, economics, and finance.

In recognition of FCCM’s work as a corporate finance advisory and consulting firm, CFI wrote that the firm has “demonstrated a track record on assisting entrepreneurs and family businesses achieve transformational growth via joint ventures, external fund-raising placements, and inorganic acquisitions.”

“In addition, it has assisted a number of entrepreneurs monetize their businesses via strategic transactions with responsible partners that could transform businesses towards a larger scale.

The team has also developed specialized practices in healthcare, consumer businesses, infrastructure, and logistics. It has complemented its workforce with industry professionals,” CFI further said.

The CFI award programme aims to demonstrate “the many ways in which the economies of the world are converging” and the awards are given to individuals and organizations “that truly add value.”

This is the second time that CFI has bestowed the recognition to FCCM. The first time was in 2019. That same year, FCCM was also given the Most Innovative Solutions Provider Award from International Finance, Inc.

FCCM has been ranked as one of the top M&A firms in the Philippines by Bloomberg and in Southeast Asia by Thomson Reuters.

“Having meaningful dialogues with our clients over a company’s lifecycle is very important. This develops customer loyalty, and annuity like revenue streams vis-à-vis a transaction-oriented approach to business,” said FCCM president and co-founder Daniel D. Ibasco.

A History of Successful Transactions

FCCM acted as one of the two financial advisers of Professional Services Inc. (PSI), the company that owns The Medical City (TMC), as it recently sealed the deal with Luxembourg-based CVC Capital Partners. The deal will involve a control entry by CVC over the hospital’s Philippine assets and operations through a combination of convertible notes and secondary share purchases via an ongoing tender offer.

FCCM has also assisted PSI in refinancing US$146 million worth of guaranteed obligations of its subsidiary in Guam with non-recourse long-term debt from a syndicate of South Korean lenders. FCCM has assisted TMC grow into one of the largest healthcare networks in the Philippines through a series of multiple transactions performed for TMC over the last 10 years.

In November 2022, FCCM advised TMC on the issuance of up to Php12.7 billion of convertible notes to Universal Healthcare Services, Pte., Ltd., which is managed by CVC. The move is part of the hospital’s recapitalization program.

“The current industry environment is ripe with opportunity driven by a demand for quality healthcare services, an increase in healthcare spending, and a growing middle class population,” Ibasco said.

Prior to the CVC-TMC deal, FCCM advised Mang Inasal Philippines Inc. on its sale of a 70% stake to Jollibee Foods Corporation, and All First Equity Holdings on its acquisition of a 60% equity
stake in Philippine Geothermal Production Company, Inc. from Chevron Geothermal Philippines Holdings, LLC (USA).

The firm was also the financial advisor of San Miguel Corporation’s acquisition of Citra Tollways’ interest in the Southern Luzon Expressway, the sale of Air 21 Group to AC Logistics Holdings Corporation, the sale of 51% of The Generics Pharmacy to Robinson Retail Holdings, Inc., Bounty Fresh Food Inc.’s US$300 million acquisition of Tegel Foods Ltd. in New Zealand, Fernwood Holdings, Inc.’s acquisition of a 100% stake in Liquigaz Philippine Corporation, and more.

An Experienced Team of Financial and Business Experts

Before founding FCCM along with Gary P. Cheng in 2007, Ibasco headed Asian Capital Markets and Southeast Asian Investment Banking for Bear Stearns and Co. in Singapore and Hong Kong. He has over 30 years of experience in investment banking, debt and equity capital markets, private and venture equity and special situations, specializing in emerging markets and Southeast Asia.

Cheng, on the other hand, is currently the Managing Director of FCCM. He was the president and CEO of Amalgamated Investment Bancorporation and has worked with J.P. Morgan in New York, Hong Kong, and London.

Ibasco and Cheng are joined in the top executive positions by Clarisse T. Tan and Michael C. Tiutan, Executive Directors for the Investment Banking Group. Earlier in the year, FCCM established a management consulting arm under the leadership of Francis S. Del Val, who has more than three decades of global executive experience.

Source: Fortman Cline Declared Best M&A Advisory Team in Southeast Asia (bilyonaryo.com)

Fortman Cline advised The Medical City on the control sale to CVC Capital Partners

FCCM acted as co-advisor on the control sale of the Philippine operations of The Medical City to CVC Capital Partners. CVC’s entry will be by way of a tender offer of secondary shares and a recapitalization of The Medical City via the subscription to notes convertible to newly issued shares of Professional Services, Inc. (PSI), the legal entity that owns The Medical City.

Source: The Medical City Poised For Renewed Growth, Welcomes CVC Capital Partners Asia V as New Investor

Many people think of investment banks as firms with a rolodex of fixed income and equity investors & companies that could be for sale…

Partly true, of course, but the infrastructure behind the larger banks has pushed fundraising and M&A activity to unprecedented volumes. Apart from market forces, deal velocity has become crucial to cover these overheads — as has the need to report revenue growth quarter-over-quarter.

So, what has happened to the quality of deals on a post-transaction basis? Have some prospered? Was value really created years after a deal had been done?

Fortman Cline Capital Markets Ltd (FCCM), a boutique advisory firm covering Southeast Asia, has decided to pursue a low-volume, high-margin approach.

It has established a management consultancy to help clients prepare for sale or assist clients with integration and strategy implementation once a deal is consummated. In other cases, it has advised clients on strategy and internal restructuring before a sale is finalized. Engaging industry professionals in key verticals such as healthcare, consumer businesses, and infrastructure services has allowed FCCM to perform well in a very competitive environment. It highlighted the firm’s strategic and commercial expertise and took it far beyond the role of ordinary financial advisors.

It has established a management consultancy to help clients prepare for sale or assist clients with integration and strategy implementation once a deal is consummated. In other cases, it has advised clients on strategy and internal restructuring before a sale is finalized. Engaging industry professionals in key verticals such as healthcare, consumer businesses, and infrastructure services has allowed FCCM to perform well in a very competitive environment. It highlighted the firm’s strategic and commercial expertise and took it far beyond the role of ordinary financial advisors.

“Having meaningful dialogues with clients over a company’s lifecycle is very important,” says Daniel Ibasco, FCCM’s CEO and co-founder. “This develops customer loyalty, and annuity-like revenue streams vis-à-vis a transaction-oriented approach to business.” Taking a holistic approach to clients’ individual situations has improved the quality of deal execution. A focused strategy on these verticals also creates discipline and focus for originating business.

Ibasco says we need to understand “the ecosystem, the key players, (and) the unmet nets in the sector” when originating transactions or mandates.

This article appeared on cfi.co Summer 2023 edition.

Fortman Cline Capital Management (FCCM) establishes management consulting subsidiary to complement M&A

FCCM establishes management consulting business under the leadership of Francis del Val who has had over 25 years of experience as CEO & senior executive in various healthcare, consumer, retail banking & data science businesses. The consulting arm, known as Fortman Cline Management Services (FCMS), assists clients in pre- and post-M&A work including strategic planning and implementation, integration, and commercial/business analytics. With FCMS, Fortman now has the capability to provide more wholistic advice which integrates strategy, operations, and marketing-related considerations apart from the traditional corporate finance function.

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