Eye on the money

A Tencent-backed Hong Kong eye clinic becomes city’s hottest IPO for years


Dennis Lam (middle) speaks at C-MER’s press conference

Thanks to the rapidly increasing demands of mainland Chinese patients, these have been heady times for Hong Kong’s private healthcare sector. But the good times have not blessed all: a number of the city’s highflying doctors have faced disgrace recently.

Take Stephen Chow, the boss of the beauty clinic DR Group. The 63 year-old physician was given a 12-year sentence last month for manslaughter following the death of a patient, who was given experimental cancer therapy during her beautification treatment. In a damning verdict, a judge slammed Chow as a “money-hungry” individual who cared little about his professional ethics.

Roy Cho, a billionaire financier – known to local stockbrokers as “the Doctor” because of his medical practice – was also caught up in the Hong Kong’s largest graft crackdown in a decade. Following a raid by investigators last month on the offices of Convoy Global, a listed insurance broker, a writ was filed accusing Cho for masterminding a “sophisticated scheme” to misappropriate shareholders’ money. The legal filing suggested Cho, a former executive director of Convoy Global, had fled Hong Kong.

Then of course, there’s Patrick Ho, a renowned ophthalmologist who had performed surgery on senior Chinese politicians. He is still under detention in New York having been indicted on bribery and money laundering charges almost a month ago, reportedly because of his role in advising Chinese energy firm CEFC (see WiC390).

It might be inferred that these heavy hitters are in trouble because they have ventured too deeply into business – rather than focusing on their medical practices. Yet with so much money at stake, many of their counterparts are trying to combine their medical acumen with business.

One of the more successful doctor-turned-entrepreneurs is Dennis Lam. The ophthalmologist founded his own eye clinic C-MER in 2012. One year later, his company expanded in Shenzhen, becoming the first Hong Kong entity to own an ophthalmic hospital in China. The 57 year-old was welcomed in the mainland because specialists like him are lacking. Moreover, his long track record of charity works has also won him a lot of friends and fans.

For instance, Lam is the founder of Project Vision Charitable Foundation, an organisation that aims to eliminate cataract blindness in China. In 2013, when C-MER was setting up shop in Shenzhen, China was gripped by a grim case that saw a 6 year-old boy’s eyes gouged out by an aunt during a family row. Lam gained nationwide fame for offering to treat the boy for free.

His efforts have paid dividends. C-MER’s Shenzhen branch had 28,000 visits during the first half of last year, giving Lam’s company more than 4% of a fast-growing market. Lam plans to open another branch in Beijing later this month.

The prospects for C-MER look promising. Indeed, they are potentially so good that Lam’s firm is set to become the first of its kind to go public in Hong Kong in an offering that will value C-MER at HK$3 billion ($385 million), or nearly 70 times its earnings.

This lofty valuation has not deterred retail investors from chasing Lam’s stock. According to Bloomberg, individuals buyers have placed orders for at least 1,557 times the number of shares C-MER initially set aside for the retail tranche in the sale, making it the hottest IPO the territory has witnessed for more than a decade (the stock will start trading on Monday).

Apparently part of C-MER’s appeal comes from one of its cornerstone investors: internet tycoon Pony Ma. The Tencent boss, just like Lam, is a Shantou native.

Meanwhile, Lam has told investors that C-MER will continue to expand in China. The company might even seek cooperation with Tencent’s medical unit in the future.

Ma might be interested in adding eyecare to Tencent’s future business plans. At the Fortune Global Forum in Guangzhou last month, Ma told the audience that he has been worrying about the deteriorating eyesight of the Chinese (including his own), admitting that everyone is spending too much time looking at their screens as they use his company’s all-consuming social media platform WeChat…

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