Abraaj exits Filipino medical centre

The emerging market firm has now divested three hospital operators in the last 18 months – and continues to invest heavily in the healthcare industry.

The Abraaj Group has exited its investment in Daniel O. Mercado Medical Center (DMMC), a tertiary hospital based in the Philippines. 

Executed via a buy-back arrangement with the Mercado family, the divestment represents a swift exit for the emerging market specialist, which first backed the business in 2010. No financial details were disclosed for the transaction. 

DMMC was founded in 1957 by Daniel O. Mercado, a Filipino orphan and graduate in medicine from the University of Philippines. The original clinic, which counted 11 rooms in 1968, has since expanded into a 100-bed, full-service hospital. 

Key initiatives backed by Abraaj have included the building of Mercado’s ambulatory and surgical centre (MASCI), as well as a management reshuffle, which led to the hire of a new chief financial officer. The firm also implemented measures to enhance the business’ environmental, social and governance (ESG) credentials such as developing fresh surgical governance measures and pollution control practices, as well as internal training on corporate governance. 

DMMC saw a 19.5 percent increase in outpatients (patients who are hospitalised for less than 24 hours) last year, including a 41.1 percent growth within MASCI. 

The medical complex is the third healthcare provider exited by Abraaj in the region in the last 18 months. The other two were Vejthani, a Thai clinic sold to healthcare chain KPJ Healthcare last January, and IHH Healthcare Berhad, a hospital operator exited via a $2 billion IPO on the Malaysian and Singapore stock exchanges in July 2012. 

Despite these disposals, Abraaj remains substantially exposed to the healthcare industry: investments it made this quarter include Steripharma, a Moroccan pharmaceuticals maker, and Rainbow hospitals, an Indian healthcare chain. The firm also backed Vine Pharmaceuticals, Uganda’s largest pharmacy chain, in January.