Actis-backed Egyptian company Integrated Diagnostics Holdings (IDH) has inked a deal to acquire a 50% stake in Islamabad Diagnostic Centre (IDC) from Evercare Group, an emerging markets healthcare platform managed by private equity firm TPG.
The deal will mark an exit for Evercare, which had picked up the stake three years ago, and will help IDH to expand its presence into South Asia.
IDH had completed a dual listing of its shares on the Egyptian Exchange earlier his year, having previously gone public on the London Stock Exchange in 2015. It has operations in Egypt, Jordan, Sudan and Nigeria,
The Egyptian company said it will buy the stake in IDC’s holding company, Base Consultancy FZ LLC, from Evercare for $72.35 million. The transaction is expected to close in the first half of 2022.
Evercare is a healthcare delivery platform that invests in emerging markets across Africa and South Asia, including India, Pakistan, Bangladesh, Kenya and Nigeria. In addition to IDC, its portfolio includes 31 hospitals and 18 clinics. It is wholly owned by the Evercare Health Fund, a $1-billion fund managed by TPG and backed by The Rise Fund.
Founded by Rizwan Uppal in 2005, IDC served nearly two million patients and performed three million tests during 2020-21. Its revenue for the fiscal year ended June 30, 2021 tripled to around $46 million. This takes its three-year annualised growth to 87%. It recorded EBITDA of $22.1 million for 2020-21 with a margin of 48% and a net profit of $13.7 million with a margin of 29.8%.
The diagnostics company has grown from 23 branches in 2017 to 85 branches in 2021, and plans to reach 100 branches by 2023. Test volumes have grown from around 800,000 to 3 million in the 12 months through June 2021. Geographically, the company operates branches in 30 cities across Pakistan and is aiming to enter another eight to 10 cities in the coming two years.
IDH will have four of the seven board seats at IDC. It plans to finance the transaction through a combination of existing cash and committed debt facilities. The debt package includes the $45 million facility secured from International Finance Corporation in May and an additional $15 million IFC-syndicated facility from Mashreq Bank.
IDH CEO Hend El Sherbini said the acquisition is “fully aligned” with the company’s regional expansion strategy that targets high-growth and underpenetrated markets. “Pakistan’s young population and lagging investment in healthcare provide for significant future potential,” El Sherbini said.
IDH’s brands include Al Borg, Al Borg Scan and Al Mokhtabar in Egypt, as well as Biolab (Jordan), Ultralab and Al Mokhtabar Sudan (both in Sudan) and Echo-Lab (Nigeria). It had 507 branches as of September 30, 2021.
Renaissance Capital is acting as the exclusive financial advisor to IDH for the transaction and in connection with the financing. White & Case LLP is the international legal counsel while Chima & Ibrahim Advocates/Corporate Counsel is the local legal counsel. Ernst & Young advised on matters pertaining to financial and tax due diligence.
EFG Hermes is acting as the exclusive financial advisor to TPG and Debevoise & Plimpton LLP is the legal counsel. RIAA Barker Gillette is the legal counsel to IDC.