Mediclinic Enters U.K. Market With $683 Million Spire Deal

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Mediclinic International Ltd., South Africa’s biggest private-hospital owner, plans to enter the U.K. after agreeing to buy a stake in Spire Healthcare Group Plc for 431.7 million pounds ($683 million).

The 29.9 percent shareholding will be bought from funds managed by Cinven Ltd., a European private equity firm, initially by Remgro Ltd., an investment company that’s Mediclinic’s biggest shareholder with a 41.4 percent stake. Spire’s shares soared 10 percent, the most since Cinven led an initial public offering of the London-based company in July, and traded 9.2 percent higher at 12:29 p.m. in the U.K. capital. That values the company at 1.4 billion pounds.

Mediclinic sees a “growing gap in terms of supply” in the U.K. because of an aging population, Chief Executive Officer Danie Meintjes told reporters on a conference call on Monday. Stellenbosch, South Africa-based Mediclinic will use Spire as a platform for more investment in the U.K., he said. Meintjes was appointed to Spire’s board as part of the deal.

Mediclinic owns hospitals in Southern Africa, the United Arab Emirates and Switzerland, and is seeking to expand in countries where rising household incomes have led to growing demand for private health care. The U.K.’s state-run National Health Service, the country’s biggest provider, is under pressure from private hospitals, which are attracting patients with shorter waiting times.

Rights Issue

Remgro and Mediclinic have no intention of making an offer for the whole of Spire, they said. Remgro, also based in Stellenbosch, about 50 kilometers (31 miles) east of Cape Town, is headed by billionaire Johann Rupert, South Africa’s richest man, according to the Bloomberg Billionaires Index.

To fund the acquisition and transfer ownership from Remgro, Mediclinic plans to raise 10 billion rand ($823 million) via a rights issue, the company said in a statement on Monday.

Mediclinic will have more than 1.2 billion rand to fund further expansion after the completion of the issue, Meintjes said. Some of that may be channeled through Spire to expand in central London and to fund new operating theaters in existing hospitals, he said.

Mediclinic shares traded 2.2 percent higher at 101.86 rand as of 12:29 p.m. in Johannesburg after earlier falling 3 percent. The stock is 1.2 percent higher this year, valuing the company at 88 billion rand.

“The Spire acquisition gives Mediclinic further currency diversification,” said Wayne McCurrie, a money manager at Momentum Wealth in Johannesburg, referring to pressure on South African companies from a weaker rand. “Mediclinic’s vast private health care experience is attractive for the U.K. market where self-pay for health care is growing.”

Netcare Ltd., South Africa’s second-largest owner of private hospitals, also operates in the U.K. Last month, the company reported improved U.K. profit margins as it seeks to attract customers keen to bypass the NHS as the British economy improves.

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