Standard Bank Group is mandated lead arranger and underwriter for around R1-billion in senior debt facilities to BusaMed Holdings, one of South Africa's first black-owned healthcare groups, for the construction of four new private hospitals in the Western Cape, the Free State and Gauteng provinces.
Construction of the first hospital, the 150 bed Paardevlei Private Hospital, in the Western Cape town of Strand, began in July this year and is scheduled to be completed by February 2015. Standard Bank Group will provide R230-million of the hospital's total cost of R410-million, with the remaining amount to be provided as equity by the National Empowerment Fund and BusaMed chief Dr Diliza Mji.
BusaMed, which has obtained licences to develop three more private hospitals in Johannesburg, Harrismith and Bloemfontein, granted Standard Bank Group the mandate to fund all four of its current greenfield hospital projects. Standard Bank Group has in turn concluded an agreement with Futuregrowth Asset Management to co-finance a significant portion of the debt facilities it provides to BusaMed.
"We are excited to have reached this next phase of development around our planned four private hospitals and partnering with both Standard Bank and Futuregrowth allows us to take our plans to the next level of development," says Dr Mji.
Aadil Cajee, Manager, Power and Infrastructure Finance at Standard Bank Group, says: "Hospitals are usually corporate financed by the healthcare groups behind the development or alternatively benefit from Government support through a PPP arrangement.
"As this is the first facility being constructed by a new entrant into the market, Standard Bank opted for a traditional limited recourse project financing mode. That makes Paardevlei Private Hospital the first project financed private sector hospital development in South Africa."
Divya Vasant, a credit analyst at Futuregrowth Asset Management, says that supporting a doctor-designed, owned and managed hospital, which could credibly provide an alternate to dominant Healthcare Groups in South Africa, is strategically important for the development and progression of the sector and underpins Futuregrowth's decision to partner with Busamed for the long term.
"The planned roll out of hospitals by Busamed nationally marks the first private sector, project-financed hospital development which over time will add not just diversity but innovation to medical practice. The collaboration of private stakeholders in healthcare infrastructure provision is testament to our core philosophy that economic and developmental sustainability are and should be congruent."
BusaMed's development of the Paardevlei Private Hospitals is expected to create 400 jobs during peak construction and a further 300 in permanent positions once the facilities become operational. The majority of the permanent jobs at all four hospitals will be for highly skilled medical staff.
Says Mr Cajee: "Hospitals are extremely labour intensive even after the construction phase as they require an army of nurses, specialist doctors and specialist management expertise.
"The need for alternative quality healthcare in South Africa is common knowledge and we believe these hospitals will make a big contribution towards meeting those needs while at the same time providing job opportunities for people across a wide geographical range of the country."
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