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PE firm Evercare to raise Sh7 billion for hospitals

Market News

PE firm Evercare to raise Sh7 billion for hospitals

Thursday July 27 2023

A private room at the Avenue Hospital maternity ward. FILE PHOTO | DIANA NGILA | NMG

US-based private equity fund Evercare wants to raise Sh7.1 billion ($50 million) by the end of this year to finance the expansion and improvement of their hospital facilities in Kenya and Nigeria.

Evercare holds a majority stake in Avenue Hospital in Nairobi and is in the process of selling its stake in Nairobi Womens Hospital to its minority partner in the facility.

Read: Nairobi Women's Hospital founder regains control

The PE fund is raising the cash under its Evercare Africa Fund I, which has an existing value of $100 million (Sh14.2 billion), meaning that the new funds if raised successfully will take the fund’s equity value to $150 million.

The Evercare fund is managed by Texas Pacific Group (TPG), whose investors include the Gates Foundation, TPG Rise Fund, IFC, British development fund BII (formerly CDC), US development fund DFC, Philips, and Medtronic.

TPG disclosed the capital raising drive in a pitch for the investment made to the Kenya Pension Funds Investment Consortium (Kepfic), which in December last year called for investment proposals from companies and project sponsors in order to identify alternative investments for member schemes.

“The aim of the Evercare Africa Fund I is to establish a healthcare platform around the existing hubs in Nairobi and Lagos, expand their speciality care, develop medical talent, digitise healthcare processes, and strengthen the supply chain across their markets,” said TPG in the pitch.

“This will lead to an expansion in reach to low-middle income households, helping to service the rapid growth in demand for healthcare in Africa.”

The fund, TPG added, is proposing to pay investors an internal rate of return (IRR) of between 17 and 20 percent, and has an investment term of 10 years.

Evercare, which operates medical facilities in emerging markets across South Asia and Africa, took over its portfolio of Kenyan hospitals in 2019 from Dubai-based Abraaj Holdings, which ran into financial headwinds.

Last year, Evercare received regulatory approval to sell its 54.9 per cent stake in Metropolitan Group Holdings—the holding company that owns Ladnan and Metropolitan hospitals— to minority co-owner Metro Group Plc, which held a 41.8 per cent stake in the company, in a deal valued at Sh1 billion.

The Competition Authority of Kenya (CAK) has also this week approved the proposed sale of Evercare’s 75 percent stake in Nairobi Womens Hospital to its founder Dr Sam Maina Thenya, who currently holds a 25 percent stake. The deal is reported by sources to be valued at about Sh700 million.

Read: Why Kenyan small firms need insurance now more than ever

PE funds —a class of investors keen on maximising profits—normally hold their investments for a period of between seven and 10 years, which offers ample time to make a return on investment and book a return for themselves and their investor funds.

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