Private Equity Investing in Healthcare

1

Africa Health Fund: Building Sustainable

Businesses In Healthcare

Investing in Private Healthcare in Africa

• Improving investment climate

• Increasing political stability

• Experiencing continual GDP growth

• Foreign investment in Sub-Saharan Africa increased from $6b in 2000 to $18B in 2005

• Demand exceeds supply - need to expand capacity of sector

• In Uganda, over 65% of the population uses private health care

• Need $11B-$16B in new health care investments to meet growing demand

By Sector0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Breakdown of Private In-vestment Opportunities in

Africa

Medical Ed-ucationRisk PoolingLife SciencesDistribution and RetailHealth Ser-vices Pro-vision

Trends and Opportunities

*Source: IFC Health in Africa Report

Overview of Financing Options

Debt

• Source: Banks• Provides loan to company• Bank is not involved in

company, but loan is made against an asset and must be paid in good and bad times

Equity

• Source: Private investors• Provides funding to company

in exchange for equity stake (example: $5M for 30% stake in company)

Debt vs. Equity

How the Bank Makes its Return:

• Receives principal and interest payments over a set time period

How the Private Investor Makes its Return:

• Sells shares back to company or another buyer

• Receives dividends from company

Differences Between Debt and Equity Clear distinction between the two sources of capital

DEBT EQUITY

Interest Rate Yes No

Interest Payments Yes No

Principal Payments Yes No

% of Equity in Business No Yes

Dividend Payments No Yes

Seat on Board of Directors No Yes

Sell Shares to Another Buyer No Yes

Spectrum of Equity Financing

• Financing available from venture capital firms (VCs)

• VCs prefer start ups and are willing to take on more risk in exchange for a higher return

• Examples: Bridgeworks Africa, Bioventures

Seed Stage

Startup Stage

Expansion Stage

Later Stage

Based on Company’s Stage in Development

Early Stage: Venture Capital Later Stage: Private Equity

• Financing available from private equity (PE) firms

• PE firms prefer established, profitable companies

• Not willing to take on high risk, expect lower returns than VCs

• Examples: Aureos Capital, Abraaj

Why You Should Consider Private Equity Private equity can accelerate your growth

• Have flexibility if there is an economic downturn

• Company’s credit rating improves and it becomes more attractive to banks and investors

• Improved governance practices

• Private equity firms have networks that you can tap into

• Technical assistance is provided

• Follow on funding can be provided to support your growth

The Africa Health Fund (AHF)

Fund Size: US $105.4 million

Investors: IFC, Gates Foundation, African Development Bank, DEG, Elma Foundation, Maria Wrigley

Trust, ASN Bank, Proparco,

Norfund, DBSA

Deal Size: $250K - $5M

Deal Type: Equity and Quasi-Equity

(Debt+Equity)

Deal Term: 3-7 years

Overview Objectives

- Invest in socially responsible and financially sustainable private health care companies in Africa.

- Expand health care services and products so that low income populations in Africa have access.

Aureos Committed to Private Health Care Investment

Health Fund Investment Profile

• Privately owned• Operating at least 2 years• Generating at least $1M in turnover• Profitable

Aureos in the Health Sector in Africa

Healthcare Delivery

ServiceRisk Pooling

Diagnostics Manufacturing

Distribution Retail Pharmacy

Health ICT Business Services

Subsectors of FocusTarget Investee Profile

Technical Assistance FacilityFurther Support for Portfolio Companies

• Provides a range of business development services to portfolio companies by strengthening and developing business growth strategies, including:

• Strengthening of financial controls

• Enhancement of operations, finance and management systems

• Building and strengthening management capabilities

• Assisting with product and services development

• Performing feasibility studies, industry research, maintain international health related compliance standards

• Appointment of experienced practitioners/advisers at board or senior management level

• Technical Assistance Facility will enable the Fund to:

● Provide guidance, training and value addition in portfolio companies’ key operational areas

● Maximise impact of increasing access to quality healthcare within low income populations

Thank You

•This financial promotion is issued by Aureos Advisers Limited which is authorised and regulated by the Financial Services Authority (“FSA”). All Aureos Funds (the “Funds”) are defined as “Unregulated Collective Investment Schemes” (“UCIS”) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only made available to professional clients and eligible counterparties as defined by the FSA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act2000 and COBS 4.12.1R. Shares or Interests in the Funds should only be purchased by persons with experience of participating in unregulated schemes and any other person who receives this document should not rely upon it.

Contact Information:

Shakir MeraliPartner

Aureos Kenya Managers LimitedTel: + 254 20 222 8870

Email: shakir.merali@aureos.com