UPDATE 1-French care home group Orpea targets Chinese market

Tue Apr 30, 2013 8:24am EDT

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By Alice Cannet

PARIS, April 30 (Reuters) - French care home operator Orpea said it plans to expand into China, its first market outside Europe, to capitalise on the needs of an ageing population expected to boom in the coming decades.

The company said on Tuesday it was creating a Chinese division in order to start building medical nursing homes in major cities such as Shanghai and Beijing.

"We made this choice for an obvious reason: the need is huge and part of the population is able to afford it either directly or mostly through children or grand-children," Orpea Chairman Jean-Claude Marian told Reuters.

Orpea has been seeking to expand abroad in recent years as legislation has made it harder to obtain authorisation to set up new care homes in its domestic market, which already has significant and varied provision for the elderly.

Shares in Orpea were the top gainers on the broader French SBF 120 index at 1156 GMT, rising 3.7 percent to 32.55 euros and valuing the company at 1.72 billion euros ($2.24 billion).

Even though the number of people in China aged over 60 is expected to soar to 450 million by 2050 from 185 million today, according to Orpea, current care home provision is very limited and almost entirely public, Marian said.

"There are considerably fewer care homes in China than in France for a need that is obviously many times greater," he said.

The company will start out with homes offering between 100 and 200 beds and should hire as many local staff as it creates spaces. Marian said it would take between 12 and 18 months to have such homes up and running.

The biggest investment in China would be staff training, as Orpea will rely on investors to buy the real estate in contrast to its current model in Europe, where it owns half of each building.

Founded by Marian in 1989, Orpea operates some 339 facilities in France - where it competes with Medica, Le Noble Age and Korian - and another 92 in Spain, Italy, Belgium and Switzerland.

In Europe, the group provides accommodation and care for people with an average age of 86 and who spend 18 to 20 months in their homes at a cost of 2,200 euros ($2,900) per month.

Orpea also confirmed its earnings targets for 2013 on Tuesday, after first-quarter sales rose 14 percent to 385 million euros. ($1 = 0.7634 euros) (Editing by James Regan)

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