HealthInvestor Asia Summit 2018
Financial intelligence for Asia's healthcare markets
Remember me:

Analysis: Returns and impact from healthcare investment in emerging markets.

Nomaan Mirza, principal equity specialist at the International Finance Corporation, looks at healthcare equity opportunities in emerging markets.

Since the golden years of the early to mid-2000s emerging markets equities have experienced leaner and more volatile times. One sector that has been a striking exception is healthcare. At IFC, the member of the World Bank Group that invests in the private sector in emerging markets, our health equity portfolio totals several hundred million dollars. IFC invests in health services because it is an investment in human capital – essential for economic development and reducing poverty. In addition to these social returns, our investments in health equities have also generated strong financial returns, higher than that of many other sectors in our portfolio, including insurance, agribusiness, and food & beverages.

Why has health outperformed other sectors in emerging markets? Demographics is part of it. Developing countries have made great progress in lowering incidences of communicable diseases. Unfortunately, however, they are also facing a simultaneous increase in non-communicable, chronic diseases as life expectancies improve. And it is the non-communicable diseases that afflict more people and typically require more sustained treatments.

It’s no surprise, then, that we are seeing a surge in demand for healthcare in emerging markets. On the supply side, providers are trying to catch up with the demand. The market has a lot of space to grow, and this makes health equities particularly attractive. Few emerging economies have the fiscal space or management capacity for the public sector to pay for the soaring demand for quality and accessible services. This means that private sector investment is a must to meet the needs for healthcare.

Health is also a defensive sector to which many investors turn when an economy faces headwinds. A person may hold off on buying a car during a recession, but they are less likely to avoid visits to the doctor or clinic. Being more resilient than many other sectors, health sector equities tend to hold up better than others, even as a country’s or region’s economic growth rate may be slowing. In fact, health stock prices have more than recovered from their pre-financial crisis performance, whereas other emerging market stocks are still struggling to recoup their losses.

At IFC, we can invest in a wide variety of financial instruments, ranging from senior loans and structured mezzanine investments to common equity. Why would companies be interested in having IFC as a shareholder? They may need a cash injection to grow and/or deleverage, and know that IFC can deliver, having built up a reputation as a responsible and trustworthy shareholder over six decades. There are other motivations as well. For instance, companies also see IFC’s global network and deep expertise in health as a valuable resource to draw from, particularly when considering expansion opportunities further afield. Moreover, having IFC as an investor often provides a signal to the market that the company takes environmental, social, and governance issues seriously, which can be particularly valuable for companies considering an IPO.

We have helped healthcare companies to successfully undergo an IPO on several occasions. Take MedLife in Romania, for example. From its humble origins in the 1990s as a small, family-owned clinic, MedLife has grown into the largest network of privately-owned hospitals and clinics in Romania. IFC first took a shareholding in MedLife in the mid-2000s, and since then we have worked with MedLife’s management and shareholders to grow its operations, improve corporate governance, and to prepare for an IPO. MedLife was the first healthcare company in Romania to successfully list on the Bucharest stock exchange when the IPO was launched in December 2016.

IFC has enjoyed similar success with its cornerstone investments in the IPOs of Malaysia-based IHH Healthcare and Fosun Pharma in China. IFC’s investment in Life Healthcare in South Africa is another interesting case. IFC played matchmaker when Life looked to expand overseas, facilitating its eventual purchase of a stake in Max Healthcare in India, also an IFC portfolio company.

Looking to the future, key healthcare markets where we see significant opportunities for investment include Brazil, China, India, Indonesia, Kenya, Mexico, South Africa, and Vietnam. IFC, with its development mandate, is also looking at how to foster new opportunities for investment in less developed countries. Particularly in Africa, where health services are fragmented and access to finance is weak, IFC sees opportunities for consolidation and is investing in private equity platforms. For example, IFC’s investment in CIEL Africa Healthcare Limited is supporting the creation of a pan-African network of hospitals which can share resources and combine purchasing power for lower costs. As we see an exponentially increasing demand for private health in emerging markets, we believe there remains a compelling opportunity for equity investors to support solid companies that can deliver tremendous development impact and excellent long-term returns.

Posted on: 29/01/2018 UTC+08:00


Life sciences company OncoSil Medical is to raise A$18.7 million (US$14.4 million) in a two tranche institutional placement and share purchase plan.
Hong Kong listed hospital services company Hua Xia Healthcare has raised HK$46 million (US$5.9 million) in a private placement. Kingston Securities managed the deal.
AK Medical Holdings, which is the largest artificial orthopaedic joint manufacturer in China, has reported a 36.3% rise in profits for the year to Rmb105.4 million (US$16.7 million) on revenues that rose 37.6% to Rmb372.7 million.
Singapore-based DocDoc, a service which enables both locals and medical tourists to find a doctor or dentist across the region, has raised US$5.45 million in Series B funding. The financing is led by Adamas Finance Asia Limited (Adam), a London listed investment company which invested US$2 million via a convertible bond offering alongside regional family offices and high net worth individuals.
The owners of Australian health imaging company Pro Medicus have sold down significant stakes in the company.
IHH Healthcare, Asia’s largest healthcare company, has acquired a 60% stake in Chengdu Shenton Health Clinic, formerly known as Sincere Chengdu Clinic, from Beijing Yizhi Zhuoxin Corporate Management Information for Rmb12 million (US$1.9 million).
Japanese home care nursing group Longlife Holdings plans to set up a fee-based nursing home in Ikeda-shi, Osaka.
Sisram Medical, a Israeli subsidiary of Shanghai Fosun Pharmaceutical, and which manufactures medical aesthetics devices, has reported an 37.2% rise in annual profits to US$11 million on revenues that were up 15.9% to US$136.9 million.


Sumit Sharma, head of health & life sciences, Asia Pacific, at Oliver Wyman, and Matt Zafra, engagement manager, health & life sciences, Oliver Wyman, look at the four themes that are going to dominate healthcare this year.
It can sometimes seem that the healthcare sector is a guaranteed money spinner for investors. It has everything going for it. Societal demands and demographics make it a sure thing, say enthusiasts. And investors have become used to the fact that everything it touches turns to gold.
Yesterday’s stock price fall for Ramsay Health Care was not entirely unexpected. Shares in Australia’s largest private hospital operator dropped 5.75% to A$63.90 (US$49.81) after it revealed distinctly unimpressive first half figures.
Susann Roth, senior social development specialist, Asian Development Bank, gives one way how health risks can be lowered at Special Economic Zones.
Nicole Hill, global director of healthcare at ALE, has a goal to make everyone and everything in healthcare connected. She explains how healthcare is entering a second wave of digitisation in Asia.
There is a simple reason why healthcare stocks on the SGX rose today. Yesterday’s budget was focused firmly on healthcare. Finance minister Heng Swee Keat announced not just an additional S$10.2 billion (US$7.8 million) for healthcare over the next year, he made clear that he was committed to the sector.
A new paper from KPMG looks at the disconnect between consumer expectations and the current healthcare experience of patients in Australia.
Gan Kim Yong, Singapore’s minister for health, explains why integrated care is important in the context of an ageing population.
my images


Hedge Fund Focus

HealthInvestor Asia twitter feed
HIA Indices