Partnership

Private Equity Firm TVM Plans to Invest $200m in Healthcare Companies

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October 27, 2014

Dubai-based private equity firm TVM Capital Healthcare Partners announced that it is going to continue investing in the region’s healthcare companies. The firm is planning to invest $200 million over the next four years. But as well as investing in the Middle East, the firm also aims to expand its investments across India.

 

Arabian Business reported on Sunday that the company is planning to invest in future healthcare businesses in the next few years. The private equity firm has previously collaborated with Western partners such as British Bourn Hall International and invested in four ventures since 2009. Previously, the investments have been made from its $120 million fund.

 

According to Helmut Schuhsler, TVM’s chief executive, the firm needs around $200 million more for its future investments. It is unclear what fundraising methods the firm is going to use. In the Arabian Business interview, Schuhsler picked up options that include “a second fund inviting the participation of co-investors or stock market listings”.

 

Schuhsler also pointed out that the firm’s immediate focus points remain entities in the United Arab Emirates, but also gaining entry to Saudi Arabia, Qatar and Oman. Furthermore, in the long-term the private equity firm also wants to focus on healthcare companies in North Africa and India.

 

The firm is currently working on its fifth investment. It is looking to get a majority stake in Egypt’s Ameco Medical Industries. The deal is currently being looked at by the Egyptian Financial Authorities.

 

The healthcare sector in the Middle East is proving irresistible to private equity companies. Partly this is because the positive growth prospects that are supported by data. Alpen Capital predicted earlier this year that the healthcare sector in the region would grow 12% a year to $69.4 billion by 2018.

 

According to Sameena Ahmad from Alpen Capital, the growth is mainly “driven by robust population growth and rising income levels. Higher income levels and sedentary life styles have led to poor health conditions, a phenomenon that has been witnessed in most developed economies”.

 

Some of these lifestyle diseases are already affecting the region. Currently, five of the six Gulf states can be found in the top 10 countries with prevalence of diabetes.

 

Furthermore, TVM is most likely not going to find it easy to compete for deals in the sector. As the Wall Street Journal reported earlier in October, private equity firms such as Amanat, The Abraaj Group and Gulf Capital have all highlighted their interest in the healthcare sector.

 

TVM also plans to follow the route of listing the companies in the stock market. Schuhsler told the Arabian Business that, “there’s an increasing interest in the healthcare sector and if you reach a certain size you can take companies public”. Schuhsler expects all of the four current United Arab Emirates entities to be public by 2018, if the market conditions are welcoming for smaller and medium-sized companies.

 

The hope is to follow the success stories of NMC Health and Al Noor Hospitals, which both listed in the London Stock Exchange and have since traded very well.

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