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IFC to Back Abraaj Capital’s US$1b Emerging Markets Healthcare Fund

17 December 2013

(VCCIRCLE) IFC invested US$100m in hospital chain Fortis Healthcare early this year.

International Finance Corp, the private sector lending arm of World Bank group, has committed to back Dubai-headquartered private equity firm Abraaj Capital’s new healthcare sector dedicated fund.

Abraaj Global Healthcare Fund (AGHF), which will chase investments in healthcare sector in emerging markets of Africa, Asia and Latin America, is targeting a corpus of $1 billion. IFC has committed to bring up to 20 per cent of the corpus in AGHF’s first close, which is expected to happen sometime next year.

IFC typically puts $10-20 million as LP commitment in PE funds which means AGHF could be looking at a first close at around $200 million.

AGHF, which aims to have social development impact, will target middle- and low-income consumers. The fund will look at greenfield investments and provide growth capital to healthcare companies focused on healthcare services, retail pharmacies, distribution of medical technologies and medicine.

PE player Abraaj Group, which has over $7.5 billion under management, provides finance for buyout and growth capital transactions to companies operating in Middle East, North Africa and South Africa.

Last year it acquired Aureos Capital, a global private equity fund management group investing in small and medium-sized enterprises across Asia, Africa and Latin America. The group has been actively looking to invest in the Indian healthcare space.

Earlier this year, Abraaj Capital together with UK-based development financial institution CDC Group Plc, invested $17.5 million in paediatric and maternal care hospital chain Rainbow.

IFC which has been an active private investor in India through a mix of straight equity, quasi equity and debt besides coming with LP commitment for India-focused PE funds, invested $1.38 billion in India during its last financial year ended June 30, 2013. This was up 43 per cent rise over the previous year.

Of the total investment of IFC last year, around 30-40 per cent was through direct private equity investment, around 10 per cent was through funding other private equity players while a large part was in the form of debt.

Earlier this year, in an interaction with VCCircle, Vikram Raju, Principal Global Funds Specialist, Regional Team Lead South Asia, Private Equity Funds, IFC, said that the fund plans to commit up to $80 million by the end of fiscal year 2013 for other PE firms in India.

IFC has separately been bullish on the Indian healthcare space and invested $100 million in hospital chain Fortis Healthcare Ltd, in what is one of the largest deals in the space for 2013.