Abraaj offloads Egyptian healthcare business

The global firm is selling a partial stake in the diagnostics service provider to Actis

The Abraaj Group, a global private equity firm, has partially exited its holding in Egypt’s Integrated Diagnostics Holdings (IDH) to pan-emerging markets firm Actis, according to a statement.

Actis has acquired a 21 percent stake in IDH, one of the largest private sector diagnostics businesses in Egypt. The firm used capital from both Actis Africa Fund 4, a 2013-vintage $212.5 million vehicle, and Actis Global 4, the firm’s 2012-vintage $1.7 billion flagship buyout fund.

Financial details of the transaction were not disclosed and the size of Abraaj’s remaining stake in the company is unclear. Abraaj declined to comment further on the transaction and did not provide return information.

IDH was formed in 2012 by the merger of two diagnostics providers in Egypt, Al Mokhtabar and Al Borg. Abraaj acquired a 76.9 percent stake in Al Borg Laboratory in 2008 for EGP778 million (€87.5 million; $109 million), PEI reported at the time.

Following its initial investment, Abraaj and IDH completed five add-on acquisitions, including investing in regional businesses in North Sudan and Jordan, which culminated with the merger in 2012.

Over the course of Abraaj’s investment, the number of employees grew from 890 to 3,700 and the company opened 200 new branches, as well as upgrading equipment and IT, improving waste management and disposal practices, and strengthening its social responsibility activities, according to the firm. Today, IDH has 262 branches that serve almost 6 million patients and conduct more than 19 million tests per year.

At the end of 2012, Abraaj was considering partially exiting IDH through an IPO, media reported earlier, and was said to then hold a 50 percent stake in the company.

The Egyptian diagnostics market has posted an annual growth rate of 18 percent over recent years, according to Actis. Following the firm’s investment, IDH will seek to “accelerate its growth trajectory in its core and adjacent markets”, offering both new and complementary services to its customers.

“IDH is a high quality business in a resilient sector,” said Hossam Abou Moussa, a director in Actis’ Cairo office. “The Egyptian diagnostics market is fast-growing, and we believe IDH’s strong reputation for superior quality and exceptional management sets up a strong future.”

The deal is Actis’ first healthcare investment in North Africa, although it has made similar investments in several other markets, including India and China.

In January 2013 the firm inked its first China healthcare deal, investing in Chinese medical equipment provider Nanjing Micro-Tech. Later that year Actis invested $48 million in Symbiotec Pharmalab, a pharmaceutical company based in India.

Actis has also made several investments in North Africa in recent years, including Université Centrale Group in Tunisia earlier this month, Egyptian snack business Edita Food Industries, in which the firm invested $102 million in June 2013, and Egypt’s Commercial International Bank, in which the firm invested $244 million in 2009.

“North Africa is an area we are extremely excited about at the moment, as we look to capitalise on the world-leading expertise we have in the region,” said Actis partner Rick Phillips, who heads up the firm’s North Africa team.

“Our strength in the healthcare sector includes businesses in China, India and Sri Lanka, so we are uniquely placed to take IDH into the next phase of growth.”