Durban - Private hospital group Life Healthcare has managed to raise R9 billion through its rights offer to fund the acquisition of the Alliance Medical Group in the UK.
The transaction consisted of an offer of 367 million new Life Healthcare ordinary shares at a subscription price of R24.50 per rights offer share.
The rights offer, which the group said was partially underwritten by FirstRand’s Rand Merchant Bank and Barclays’ Absa closed last Thursday. It said the rights offer was 97.6 percent subscribed and said the underwriters would not be required to subscribe for any rights offer shares.
Life Healthcare initially announced the rights offer in December, when it said that it wanted to acquire the 95 percent controlling stake in the UK-based group.
The group said at the time that besides acquiring the hospital group, it also wanted cash to pay its debt.
Neil Brown, co-fund manager at Electus Fund Managers, said the hospital group announced the R9 billion rights offer about five months ago.
“The rights offer was to pay for their acquisition of the Alliance Medical Group in the UK, which was announced in late 2016,” said Brown.
The fully underwritten offer will cut Life Healthcare’s debt to the appropriate level of gearing for the company to restore its investment grade credit rating and to maintain sufficient financial flexibility to pursue its planned capital investment programme as well as to continue paying dividends.
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The acquisition of Alliance Medical would give Life Healthcare access to the UK, Italy and Ireland. Life Healthcare also operates in Poland and India.
It said the Alliance Medical Group deal would provide it with geographic diversification from 4 percent to 24 percent of revenue, which would be generated outside of South Africa.
The group has also acquired Polska Grupa Medyczna for R629 million and Carint for R103 million, funded from debt raised in Poland.
In India, Life Healthcare has invested R2.5 billion from its South African operations into Max, which includes an additional R320 millon invested during the year to fund the Max Smart acquisition in India by Max.
For the year ahead, the group said it was well positioned strategically and it had access to the funding necessary to fulfil its international expansion aspirations.
In its latest results, Life Healthcare reported a 11.66 percent decline in profits to R1.97 billion for the year to end September, although revenue gained 12 percent to R16.4 billion.
Life Healthcare shares rose 0.19 percent on the JSE to close at R26.05.