In a move that is likely to attract significant attention in global healthcare and financial markets, Network Healthcare Holdings (Netcare) has announced its acquisition of a controlling interest in General Healthcare Group Limited (GHG), the leading UK private hospital organisation.
Netcare has undertaken the acquisition of GHG as part of a consortium including Apax Partners Worldwide LLP, London and Regional Properties, Brockton Capital LLP. “The consortium will acquire 100% of GHG for £2.2bn on an enterprise value basis. Netcare will own 50.1% of GHG in return for an investment of approximately £217m, along with the injection of its wholly owned UK subsidiary Netcare Healthcare UK Limited (“Netcare UK”).
The £217m will be funded using new debt facilities provided by Dresdner Bank AG (London Branch) that have been raised for the purposes of this acquisition. The balance of the purchase price will be provided by the consortium partners and debt financing raised at GHG on a nonrecourse basis to Netcare South Africa,” stated Michael Sacks.
With a national network of 49 hospitals and approximately 2,400 beds, GHG is the leading provider of private acute care in the UK. The group’s facilities and doctor base enables the company to offer a comprehensive range of medical and surgical services. Considering the current combined earnings of the two companies, Netcare’s turnover is set to increase by at least 87%, while the combined portfolio of hospitals and ambulatory day care centres will stand at 120, with a total of over 11,500 hospital beds.
According to Netcare’s CEO Dr Richard Friedland, the deal in no way detracts from Netcare’s operations in South Africa: “Netcare remains fully committed to providing affordable, quality healthcare to more South Africans. We fully embrace the Department of Health’s drive to achieve equity and access in healthcare. As one of the largest hospital and managed healthcare operators in South Africa, there are limited acquisitionbased expansion opportunities on offer to Netcare domestically.
“As part of our future growth strategy, Netcare has long been seeking to expand its operations internationally. The first part of this strategy saw the establishment of a UK subsidiary, Netcare UK, in 2002 to focus on providing care to National Health Service (NHS) patients via contracts awarded by the UK Department of Health.
Netcare UK has become a pathfinder in NHS outsourcing programmes and a member of ‘NHS Partnerships’, a group of companies committed to working closely with the NHS.
“Having served the needs of the UK healthcare market, we have gained invaluable insight into the challenges and opportunities that exist in this market. We have targeted the UK healthcare market for expansion, as the long-term demographic trends and prospects for development of the private acute care market as well as partnership with the NHS offer significant future growth potential.”
He adds that the acquisition of a controlling interest in GHG represents the next stage of development for Netcare in the UK, providing Netcare with a leadership position in the UK private acute care market and a platform for further enhancing relationships with the NHS.
Following Netcare’s acquisition of control of GHG, the strategy for the combined group in the UK will involve the continued commitment by Netcare to being the NHS’s partner of choice, providing sustainable solutions for the benefits of patients, and the further development of the private acute market, serving both the insured and self-pay sectors.
