Expanding populations combined with consumers that are increasingly looking to spend their own money on private healthcare, North Africa is becoming more attractive to private equity firms with an appetite for investing in healthcare. Following a turbulent time for North African governments during the Arab Spring, many of these countries now have poorly funded healthcare systems. This underinvestment provides opportunities for private equity firms to invest.
Preqin’s Fund Manager Profiles database tracks 47 private equity firms that consider healthcare investment in North Africa as part of a wider investment focus. As shown in the above table, the firm to raise the largest amount of these 47 managers is Actis, a UK-based private equity firm focusing on growth in the emerging markets of Africa, Latin America, China, South Asia and South-East Asia. Actis has collected over $6bn in aggregate capital commitments over the last decade and in 2013 closed Actis 4 Africa Co-Investment Fund, a purely Africa-focused fund set up to co-invest alongside Actis 4, the pan-emerging markets vehicle.
The largest firm based in North Africa in terms of capital raised is Africinvest. Headquartered in Tunisia and focused on investments in growth industries, including financial services, agribusiness, consumer/retail, education and healthcare, the firm has raised $0.9bn in aggregate commitments over the last 10 years. The firm is currently in the process of raising Africinvest Fund III, a vehicle which looks to provide expansion capital to SMEs and mid-market companies located in Africa.
It is rare to find funds that invest solely in the North African healthcare market, as this would be quite a niche and potentially risky primary focus; firms prefer to target a variety of opportunities. For example, as a result of increasing consumer demand, GPs will focus on industries such as consumer products, education and infrastructure, spreading the investment risk when focusing on a less developed region. However, with Abraaj buying stakes in two private hospitals serving middle-class patients in Egypt, in addition to two further hospitals in Tunisia in 2014, and other private equity firms looking to invest in the region’s healthcare, this could change.