Hosp Sao Luiz

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25344
Company name	Hospital Sao Luiz
Country	Brazil
Sector	Health Care
Environmental category	B
Department	Health and Education
Status	Active

Date SPI disclosed	December 21, 2006
Projected board date	January 23, 2007
Previous Events	Invested: February 22, 2008 Signed: October 23, 2007 Approved: March 2, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

In 2004, as part of its strategy to expand its footprint and establish a network of private hospitals in Brazil, São Luiz Group (SLG or São Luiz) entered into a partnership with a local real estate investor to launch a 334-bed maternity and general hospital in the eastern region of the city of São Paulo, the Hospital e Maternidade Anália Franco (HMAF). As part of the deal, real estate investors will own and maintain the building and SLG will enter into a long term lease (15 years renewable for another 15 years) to rent the facility. Anália Franco is scheduled to open in May 2007.

Project sponsor and major shareholders of project company

The São Luiz Group, a leader in the Brazilian market, is a for profit, São Paulo based, organization providing health services through its two well established hospitals: Hospital e Maternidade São Luiz - Itaim (Itaim); and Hospital São Luiz - Morumbi (Morumbi). Itaim and Morumbi operate under an “open” hospital model with a combined 567 beds, over 11,000 accredited medical doctors and 2,700 staff. Together, they perform over 9,000 deliveries and treat in excess of 30,000 in-patients and 270,000 emergency room attendances every year.

Founded in 1938, SLG is controlled by two family groups (the Vasone and Marco Antonio families) that together own 53% of the company’s shares. In addition to the two hospitals, the São Luiz Group is also comprised of a hospital management company, Administradora Hospitalar São Luiz (AHSL) and a small health insurance plan with approximately 8,300 lives. While both families exert significant influence in setting strategy for SLG, management of the operations is largely accomplished by a team of professionals with extensive experience in the health care industry.

Total project cost and amount and nature of IFC's investment

The total project cost is $48 million, excluding physical construction costs. These funds will allow the SLG to equip and furnish the Anália Franco hospital, publicize its opening and fund working capital requirements until the hospital is able to generate cash. Costs of physical construction of approximately $47 million were financed by the real estate developers and their investors. The proposed IFC investment is an A/B loan of up to $34 million of which $17 million A loan will be for IFC’s own account and $17 million syndicated B loan will be for Banco Santander.

Location of project and description of site

The hospital is ideally located in the eastern region of the city of São Paulo and is expected to capture market share in a growing middle class neighborhood which currently lacks adequate hospital services.

The Anália Franco Hospital building incorporates:

- A modern architectural design, maximizing patient comfort and operating efficiency;
- A maternity and general hospital wings with separate entrances and elevators;
- A comprehensive range of services with particular emphasis on internal medicine, surgery, gynecology-obstetrics and pediatrics;
- A well equipped emergency ward interconnected to a diagnostic center;
- A vertical floor distribution:
- Basement: diagnostic center;
- Ground Floor: social and reception areas and auditorium for 150 people;
- Mezzanine: hospital management;
- First Floor: intensive care units;
- Second Floor: general surgery center and obstetric center;
- Third Floor: Hemodynamic Unit, dressing rooms, central supplies and blood bank;
- Fourth to Seventh Floors: Maternity and inpatient wards; and
- Top Floor: technical and water supply areas and heliport connected to hospital elevators.

Anticipated development impact of the project

The hospital in Brazil will have a strong development impact by:

- Increasing standards for delivery of health services in Brazil. As one of the leading hospitals in the country, SLG is constantly introducing new practices and procedures through its network of hospitals to increase the efficacy of its services;
- Promoting rationalization of the private Health sector in Brazil, with SLG’s emphasis on protocols and efficiency standards in the operation of its hospitals;
- Assimilating and disseminating best practices in delivery of health services from leading institutions in the world; and
- Offering an attractive employment alternative to increasing numbers of local health professionals, currently over 11,000 accredited doctors and 2,700 staff.

IFC's expected development contribution

By partnering with the SLG, IFC will:

- Share international experience and best practices to support one of the few hospital groups in Brazil that appears to be capable of leading a process of rationalization and consolidation of private health services in the country;
- Provide attractive, long term, financing to facilitate delivery of health services to a largely underserved, middle class area in the city of São Paulo; and
- Help promote investments in the sector by mobilizing capital from other market lenders under our B-Loan structure (Banco Santander is keen on participating in IFC sponsored transactions in the sector).

Environmental and social issues - Category B

The project will have limited potential adverse environmental and social impacts. Also any impacts will be few in number, site-specific, reversible, and easily addressed through agreed mitigation measures. As a result of the above this is a Category B project according to IFC’s Environmental and Social Review Procedures.

The following Performance Standards apply to this project:

- PS1 Social and Environmental Assessment and Management
- PS2 Labor and Working Conditions
- PS3 Pollution Prevention and Abatement
- PS4 Community Health, Safety and Security

The relevant guidelines have been provided to and discussed with the client in a meeting on October 25, 2006 and site visit on October 26, 2006 (i.e. General Environmental Guidelines, July 1998; Occupational Health and Safety Guidelines, June 2003; Life and Fire Safety Guidelines, December 2003; Hazardous Materials Management Guidelines, December 2001; and Health Care Facilities, May 2003).

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