Cleopatra Hospitals Group to acquire Alameda’s healthcare assets in Egypt

Deal is expected to close in the first half of 2021 and will add three hospitals to CHG's portfolio

This picture taken on October 23, 2019 from the Cairo Tower in the centre of the Egyptian capital shows a view of the Nile river flowing through the city between the central downtown (R) and Zamalek (L) districts.  / AFP / Mohamed el-Shahed

Cleopatra Hospitals Group (CHG), one of Egypt's largest private hospital groups, said it will acquire the Egyptian assets of the UAE's Alameda Healthcare Group.

The deal, which is expected to close in the first half of 2021, is subject to approval by the Egyptian regulatory authorities and CHG shareholders, the Egyptian Exchange-listed CHG said in a statement on Sunday.

Alameda is a UAE company that is owned and controlled by chairman Fahad Khater, and has a strategic partnership with Emirates Healthcare Group, part of Abu Dhabi-based investment firm KBBO.

“This is a transformational acquisition for CHG that will add three sizeable operating hospitals to our family while more than doubling the [earnings before interest, tax, depreciation and amortisation] of CHG post-closing,” Ahmed Ezzeldin, chief executive of CHG, said. “This will significantly increase the group’s bed capacity and allow CHG to enhance quality and value of care for all our patients.”

Alameda operates three hospitals in Egypt, including Dar El Fouad 6 of October, Dar El Fouad Nasr City and As-Salam International Hospital, while As-Salam International Hospital Katameya in new Cairo is expected to start operations in the first half of next year.

The transaction will largely be settled through the issuance of loan notes in favour of Alameda’s shareholders, mandatorily convertible into new shares by CHG and fully subscribed to by Alameda shareholders, according to the company.

A portion of the loan notes that are convertible into shares may be settled in cash, in accordance with the agreed mechanism in the deal, the company said.

Alameda’s unaudited revenue for the nine-month period ended September 30 rose 4 per cent year-on-year to 1.49 billion Egyptian pounds ($94.9 million) “despite the overall market challenges resulting from the Covid-19 pandemic”, the statement said. Revenue grew 30 per cent during the three-month period from September to November.

“Post-transaction, the combined bed capacity of 1,450 beds will represent 15 per cent of the commercial bed capacity in Greater Cairo and 4 per cent of the commercial bed capacity in Egypt,” CHG chairman Ahmed Badreldin said. “The combined group will have the financial flexibility to invest in further expanding bed capacity across Egypt’s other governorates with a continued focus on improving patient care.”

Mr Khater will become a key shareholder in CHG and will take on the role of vice chairman, in addition to his role as chairman of Alameda Healthcare after the deal is closed, CHG said in the statement.

EFG Hermes is acting as financial adviser on the deal, while Freshfields Bruckhaus Deringer and Zulficar & Partners are acting as legal counsels to CHG. White & Case and Matouk Bassiouny & Hennawy, ALC Alieldean, Weshahi & Partners and Dechert are acting as legal counsel to Alameda and CI Capital is its financial advisers.

Demand for hospitals and medical services has increased across the world due to the coronavirus pandemic. Countries are spending heavily to boost healthcare infrastructure as pressure increases on hospitals to accommodate more patients.

KBBO Group, whose chairman Khalifa Bin Butti Al Muhairi was a significant shareholder in troubled hospital group NMC Health, appointed a team of restructuring advisers earlier this year to help put together a plan to reorganise its outstanding liabilities to various creditors. The company also has investments in education, food and retail, financial services and technology sectors.