Network Healthcare Holdings Limited acquires leading private hospital group in UK
25 April 2006
Tuesday, 25 April 2006: In a move that is
likely to attract significant attention in global healthcare and
financial markets, Network Healthcare Holdings (Netcare) today
announced its acquisition of a controlling interest in leading UK
private hospital group, General Healthcare Group Limited
Commenting on the deal, Michael Sacks, Chairman of Netcare, said
that the large international acquisition was set to transform
Netcare into one of the largest global healthcare organisations in
the world. "Moreover, it affords us significant potential for
future growth and value creation in the UK healthcare market as
well as an ideal platform for future international growth in the
"Netcare has undertaken the acquisition of GHG as part of a
consortium with three leading UK-based financial and property
investors, funds advised by Apax Partners Worldwide LLP, London and
Regional Properties and funds advised by Brockton Capital LLP. This
relationship has been crucial in this transaction and may serve as
a formidable coalition for future opportunities," explained
"The consortium will acquire 100% of GHG for £2.2bn on an
enterprise value basis. Netcare will own 50.1% of GHG in
return for an investment of approximately £217m, along with the
injection of its wholly owned UK subsidiary Netcare Healthcare UK
Limited ("Netcare UK"). The £217m will be funded using new debt
facilities provided by Dresdner Bank AG (London Branch) that have
been raised for the purposes of this acquisition. The balance
of the purchase price will be provided by the consortium partners
and debt financing raised at GHG on a non-recourse basis to Netcare
South Africa," added Sacks.
With a national network of 49 hospitals and approximately 2,400
beds, GHG is the leading provider of private acute care in the
UK. The Group's facilities and doctor base enables the
Company to offer a comprehensive range of medical and surgical
services. Considering the current combined earnings of the
two companies, Netcare's turnover is set to increase by at least
87%, while the combined portfolio of hospitals and ambulatory day
care centres will stand at 120, with a total of over 11,500
According to Netcare's CEO, Dr Richard Friedland, the deal in no
way detracts from Netcare's operations in South Africa:
"Netcare remains fully committed to providing affordable, quality
healthcare to more South Africans. We fully embrace the Department
of Health's drive to achieve equity and access in healthcare.
As one of the largest hospital and managed healthcare operators in
South Africa, there are limited acquisition-based expansion
opportunities on offer to Netcare domestically."
"As part of our future growth strategy, Netcare has long been
seeking to expand its operations internationally. The first part of
this strategy saw the establishment of a UK subsidiary, Netcare UK,
in 2002 to focus on providing care to National Health Service (NHS)
patients via contracts awarded by the UK Department of
Health. Netcare UK has become a pathfinder in NHS outsourcing
programmes and a member of "NHS Partnerships", a group of companies
committed to working closely with the NHS."
"Having served the needs of the UK healthcare market, we have
gained invaluable insight into the challenges and opportunities
that exist in this market. We have targeted the UK healthcare
market for expansion, as the long-term demographic trends and
prospects for development of the private acute care market as well
as partnership with the NHS, offer significant future growth
potential," says Friedland.
He adds that the acquisition of a controlling interest in GHG
represents the next stage of development for Netcare in the UK,
providing Netcare with a leadership position in the UK private
acute care market and a platform for further enhancing
relationships with the NHS.
Following Netcare's acquisition of control of GHG, the strategy
for the combined group in the UK will involve:
- The continued commitment by Netcare to being the NHS's partner
of choice, providing sustainable solutions for the benefits of
- The further development of the private acute market, serving
both the insured and self-pay sectors;
- Delivering the highest possible standards of patient care
across all our services;
- Using the combined expertise and experience of the senior teams
from both businesses to drive innovation, excellence and
- Being the independent employer of choice, offering outstanding
career opportunities for high calibre individuals; and
- Using the consortium's financial strength to invest in
maintaining long-term leadership as the UK healthcare market
expands due to an ageing population.
In conclusion, Friedland said that GHG has a strong management
team, with whom Netcare will partner to drive the development of
the UK business forward. As a result, the acquisition of GHG
would not denude Netcare South Africa of resources or management
Notes for Editors
Key benefits associated with the GHG acquisition to
- It establishes Netcare as one of the world's largest healthcare
groups, with 120 hospitals and more than 11,500 beds under
- It provides Netcare with a clear leadership position in the UK,
one of the largest and most attractive healthcare markets
- Significantly enhanced growth prospects for Netcare, as a
result of the growth potential in the UK healthcare market;
- Realisation of synergies by leveraging certain Netcare
operating skills and practices across the GHG business;
- Benefits from pro-active management of the GHG property
portfolio, via the skills and expertise of the Consortium Partners;
- It provides Netcare with a potential platform for future
international growth in the longer term.
More about Network Healthcare Holdings Limited
South African-based Network Healthcare Holdings Limited
(Netcare) is listed on the Johannesburg Securities Exchange
The largest, integrated private healthcare organisation in
Southern Africa, Netcare owns, manages and has interests in 71
hospitals and same-day surgical units comprising 9,285 beds, 358
operating theatres, 82 pharmacies and 61 specialised medical
centres; and is supported by more than 2,500 medical
From a primary care point of view, the Group owns and manages 53
Medicross Family Medical and Dental Centres, and has an investment
in Primecure, a business which has an integrated range of
healthcare services primarily for the emerging market with a
network of 45 medi-centres and 2,000 contracted service
providers. Collectively, the medical facilities within the
Netcare Group care for more than 5.8 million patients a year.
While Netcare's strategy is focused on its core hospital
business, its vision of developing an integrated healthcare
organisation has resulted in the establishment of complementary
healthcare-related divisions. These include Netcare 911 (which is
contracted to provide emergency services to more than 8.5 million
South Africans); National Renal Care (38 dialysis units
countrywide); 11 SAA-Netcare Travel Clinics; and 174 Ampath
pathology laboratories and units.
The Group remains committed to making healthcare more
accessible, affordable and sustainable for more South
Africans. In doing so it has committed itself to partnering
with the Department of Health and other stakeholders.
The Netcare Group employs 16,574 staff members.
More about Netcare Healthcare UK Limited "Netcare
Netcare UK entered the British healthcare market in 2002,
offering increased resources to deliver NHS Waiting-list
initiatives as part of the UK Department of Health's Independent
Sector Treatment Centres Programme.
The company is currently fulfilling a five-year contract to
perform 44,500 cataract operations for the NHS via mobile services
as part of the UK Department of Health's Independent Sector
Treatment Centres Programme.
As part of the same programme Netcare also opened a 45-bed,
three-theatre facility in Manchester in May 2005 where it will be
performing 44,800 orthopaedic, ENT and general surgical procedures
over a five-year period.
The Greater Manchester Surgical Centre (GMSC) is a newly built
facility attached to the Trafford General Hospital where
specialists from Netcare UK perform elective orthopaedic, ENT and
general surgical procedures. Patients are treated in purpose built
Netcare UK facilities comprising three theatres and wards equipped
with 45 beds.
Netcare UK has also been selected as preferred bidder for the
development of two of the seven "NHS Treatment Walk-in Centres with
a Commuter Focus", which will be established near major railway
stations across the UK.
More about the General Healthcare Group
A leading provider of independent healthcare services and
private acute care in the UK, GHG owns and manages the majority of
its 49 hospitals comprising 2,476 beds, 152 operating theatres and
GHG hospitals are geographically well situated with units spread
across the UK, reaching a higher proportion of the medically
insured population than any other similar business.
The group retains a focus on quality of service and efficiency,
with a deserved reputation in the independent healthcare sector for
consistent achievement of these values. As a result GHG's
individual hospitals have built
strong and sustainable local businesses.
Since its formation in 1970 the General Healthcare Group (GHG)
has evolved though the development and acquisition of a number of
private healthcare organisations.
GHG employs approximately 8,300 staff members. GHG is supported
by over 4,200 medical specialists.
More about Netcare's Consortium Partners
Apax Partners, created in 1972, is one of the world's
largest private equity firms and has expertise focused on five
industry sectors, in particular healthcare. Apax Partners has
raised approximately $20 billion around the world, and invested in
more than 500 companies. Since 1995, over 65 of its portfolio
companies have gone public on stock markets around the world. At
point of entry to market, these companies had a collective market
capitalisation of over $34 billion. Recent related investments
include Mölnlycke Health Care (a Swedish manufacturer of medical
supplies), Regent Medical (a UK producer of antiseptics and
surgical gloves) and MediMedia (one of the four largest healthcare
publishing companies in the world).
Headquartered in London, L&R is one of the largest
private property companies in Europe with investments, developments
and business interests exceeding €6.0 billion in over seven
countries, including the UK, Sweden, Finland, Germany, Denmark and
Lithuania. L&R was established in 1987, and is owned by Richard
and Ian Livingstone. L&R has offices in London, Stockholm and
Brockton is a UK-only opportunity fund established in 2005
by David Marks and Jason Blank, who have significant experience in
real estate and dealing with private equity. Brockton's first fund,
Brockton Capital I, raised £150m and has a life of five years.
Brockton recently acquired the head office of GAM investments fund
at St James's in London SW1 for £25m.
For further information please contact:
Head of Communications
T: +44 20 7872 6300
Network Healthcare Holdings (Netcare)
Martina Nicholson Associates (MNA)
T: (011) 469 3016 or 0 83 631 6647