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APG estimates 20% return for healthcare PE investment in Africa

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  • APG estimates 20% return for healthcare PE investment in Africa

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GLOBAL - The €240bn asset manager APG has said it is expecting a return of at least 20% from a private equity investment in private healthcare in Africa.

With its €12.5m investment in the Investment Fund for Health in Africa (IFHA), APG is anticipating a strong demand for care from the continent's growing middle class.

APG officials said: "Over 50% of the healthcare in Africa is provided by the fragmented and under-developed private sector, with commercial firms having limited access to capital.

"In addition, we have noticed a trend of a rising number of companies offering healthcare to their workers as part of labour conditions."

According to APG, IFHA is investing in private companies in sub-Saharan Africa, which supply pharmacies, provide healthcare insurance and run private hospitals, clinics and laboratories.

IFHA said pharmaceutical company Pfizer and the African Development Bank were among the investors, which have committed a total of €50m to the "social private equity fund".

As an IFHA stakeholder, the asset manager claimed to be stimulating better conditions for labour, safety and environment, while also contributing to the United Nations' Millennium aim of increasing the number of low-income workers with health insurance.

It made clear that, in part thanks to its investment, a Nigerian healthcare insurer had become financially sound and therefore more attractive to potential buyers.

Harmen Geers, spokesman at APG, said: "Although APG has bought a stake in IFHA as a social responsible investment, it is not meant as charity, but to generate returns for the participants of our clients."

He said the investment was still in its initial stage, but that APG estimated returns of 20-30% at exit, which will occur over the next five to seven years.

"The result is expected to be similar to the returns of private equity in emerging markets, with high risks, but also the potential for high returns," Geers said.

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