PHP reduces risk with a cash inflow from Singapore's wealth fund

91.4p (£2.37bn) - New strategic joint venture with GIC

My colleague Roland noted back in June that PHP was working on a joint venture and that the JV partner might well be GIC (Singapore's sovereign wealth fund).

Earlier this week, we got confirmation of a 50:50 joint venture:

The JV will be seeded with 27 private hospitals from PHP’s existing portfolio (the “Seed Portfolio”), valued at approximately £0.7 billion, providing a strong foundation to benefit from the long-term structural growth in the sector.

From this deal, PHP will receive £0.5 billion, which will be used to repay debt.

With GIC bringing money and PHP bringing hospitals, the result is a large cash inflow and an interesting stategic plan with a prestigious partner, offset by the loss of total ownership over these 27 hospitals.

CEO comment:

In addition to generating proceeds to reduce our borrowings, the transaction enhances returns on invested equity for our shareholders and brings a highly aligned capital partner to support investment in essential UK hospital infrastructure. Together, we are well positioned to capitalise on the significant structural growth opportunities in the private healthcare market.

The valuation of the hospitals for the purpose of this JV agreement is only a 5% discount to Dec 2025 book value.

For context, PHP's adjusted net tangible assets (NTA) per share were reported at 104p as of June 2026. So the market has already been marking PHP shares at a modest discount to NTA.

Looking ahead, PHP will earn a management fee and possibly performance fees from the JV.

Balance sheet results: "On a proforma basis, PHP’s net debt to EBITDA will reduce below 10 times, LTV to below 55% and the proportion of government-backed income will return above 80%."

Graham's view

Continued downward pressure on loan-to-value will certainly help to secure PHP's investment-grade credit rating.

Assura, which was bought by PHP last year, has a BBB+ (investment-grade) rating from Fitch.

Fitch previously had a negative outlook on this rating, but revised the outlook to "Stable" this week, following the news of this JV.

While an investment-grade rating is no guarantee of safety, it is clear that PHP's investors can breathe a little easier now,than they could one week ago.

I'm happy to maintain Roland's moderately positive stance on this one. It offers a modest discount to adjusted NTA and a generous 8% yield at the current price, with slightly less risk attached than it had before.