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Network Healthcare Holdings Limited acquires leading private hospital group in UK

25th 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 (GHG).

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 (GHG). 

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 longer term."

"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 Sacks.

"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 hospital beds. 

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 patients;
  • 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 growth;
  • 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 capability.


Notes for Editors

Key benefits associated with the GHG acquisition to Netcare

  • It establishes Netcare as one of the world's largest healthcare groups, with 120 hospitals and more than 11,500 beds under management;
  • It provides Netcare with a clear leadership position in the UK, one of the largest and most attractive healthcare markets globally;
  • 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; and
  • It provides Netcare with a potential platform for future international growth in the longer term.

More about Network Healthcare Holdings Limited (Netcare)

South African-based Network Healthcare Holdings Limited (Netcare) is listed on the Johannesburg Securities Exchange (JSE). 

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 specialists. 

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 UK"

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 (GHG)

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 37 pharmacies.

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
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 Helsinki.

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:

Apax Partners
Ben Harding
Head of Communications
T: +44 20 7872 6300
E: ben.harding@apax.com

Network Healthcare Holdings (Netcare)
Martina Nicholson
Martina Nicholson Associates (MNA)
T:  (011) 469 3016 or 0 83 631 6647
E: martina@mnapr.co.za