Uganda Health Care insurers attract Private Equity Funds

Health insurance providers in Uganda are attracting investments from equity fund firms and international financiers.

International Medical Group, which recently sold 35 per cent of its shares to two equity fund firms and received a loan from the International Finance Corporation, is the latest beneficiary. The equity fund firms acquired the shares for Ush7.9 billion ($3.2 million), while the IFC loan is worth Ush5.5 billion ($2.2 million).

Ian Clarke, IMG chairman said TBL Mirror Fund, representing investors from the Netherlands, and the Kibo Fund, which is affiliated to the Fortis Hospital Group in India, will ensure growth, get funds to buy new equipment and bring in new managers to re-organise the hospital.

“When an organisation as big as ours is seeking further growth, they have to bring in others,” Dr Clarke said.

Kevin Duffy, the IMG chief executive said health service providers are increasingly looking to lenders like IFC and equity funds because equipment is quite expensive yet banks in Uganda are unwilling to give long-term loans on favourable terms.

“It’s quite difficult for an organ like ours to get loans at reasonable interest rates,” Mr Duffy said.

The capital received from equity fund firms and the IFC loan will be used to upgrade hospital equipment that include a 40 slice CT scan worth Ush1.2 billion ($500,000) for cardiology diagnosis.

The investment at IMG comes less than three years after AAR, another health insurance provider working in Tanzania, Uganda and Kenya received Ush22 billion ($8.9 million) from Investment Fund for Health in Africa of the Netherlands.

The funds were to be used to implement a low-income health insurance project in Kenya, open new clinics and upgrade facilities in Uganda. IFHA acquired 22 per cent shares with an option to take a further 66 per cent in future.

Mark Achola, the managing director at AAR, said besides the profitability of the sector, Africa’s major challenges in the provision of healthcare services has also appealed to the moral consciousness of the western world.

“The West is interested in providing a solution to Africa where many diseases go untreated,” Mr Achola said.

Nakasero Hospital in Kampala is also discussing a loan agreement with IFC that will help it buy laboratory equipment.

Sam Akyianu, the IFC operations officer said the corporation conducts due diligence market research on its potential client’s plans, then invests if viable. He added that IFC was willing to invest in various sectors across Africa.

In Uganda, IFC has invested in the telecommunications, infrastructure, agribusiness, banking, mining and real estate sectors.

By DICTA ASIIMWE
The East African Newspaper
12-May-2012