A private equity fund focused on providing African citizens with access to healthcare has added GE Healthcare as a limited partner in its drive to invest in specialised hospitals, medical diagnostics and pharmaceuticals.
GE Healthcare, which specialises in medical technologies and services, will disclose a proposed minority investment in the fund, named Rx, which seeks to raise target funding of around US$200 million by the third quarter of 2017.
Rx aims to meet increasing demand for high-quality healthcare services in north and sub-Saharan Africa. Its focus countries include Kenya, Nigeria and Ethiopia, as well as in Egypt, Tunisia and Morocco in north Africa. The fund is reaching out to investors at a time when the International Monetary Fund (IMF) predicts a four-year growth spurt across the African continent of around 6 percent per year, the preceding years from which have produced a huge middle class, making stable private healthcare ever more crucial.
Rx previously received funding from the African Development Bank, which together with GE Healthcare’s support is expected to introduce industry and regional expertise to its target markets, according to the fund’s CEO, Dr Hatem El Gabaly.
“We believe our fund will offer a unique value proposition to the potential investors, in which it will be supported by veteran healthcare professionals, seasoned private equity professionals, and experienced investors,” El Gabaly said at the announcement of the partnership.
Farid Fezoua, president and CEO of GE Healthcare Africa, added: “As Africa’s banks and financial services industry sharpen their focus on the continent’s expanding health sector, nurturing homegrown strategic funding and financing solutions combined with operators’ and technology domain expertise has the potential to provide a significant boost for local private sector healthcare providers, SMEs and entrepreneurs as well as public-private partnerships.”
Rx is managed in partnership with EFG Hermes, a financial services corporation based in the Middle East and north Africa.
El Gabaly, who is also Egypt’s former minister of health, told Development Finance at the Fourth African Healthcare Summit in February 2017 that development finance institutions such as the African Development Bank help educate investors about the minimum investment cycle necessary to ensure the poorest countries gain access to healthcare. Many investors he suggested look to invest in a maximum of seven years in health projects, while in reality successful project require a minimum ten year commitment.
Speaking at the announcement of the partnership, he said that Africa’s healthcare sector remains unique for offering investors both “the potential for superior risk-adjusted returns as well as the opportunity to invest responsibly in a critical sector”. He concluded that investment in healthcare would have “measurable impact on the wider economy”.