Saudi G Hospital

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	25341
Company name	Bait Al Batterjee Medical Co.
Country	MENA Region
Sector	Health Care
Environmental category	B
Department	Health and Education
Status	Completed

Date SPI disclosed	October 31, 2006
Projected board date	December 20, 2006
Previous Events	Approved: January 3, 2007

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project consists of financing the expansion in the MENA region of Saudi German Hospitals Group (SGH or the Group). SGH has been a major participant in the health sector in Saudi Arabia since 1988 and currently owns and operates 5 hospitals. The 300-bed multi-specialty hospital in Sana’a, Yemen which opened in June 2006, and the similarly sized hospital now under construction in Cairo, Egypt, aim to raise the standard of medical care in both countries.

Project sponsor and major shareholders of project company

Both projects are sponsored by SGH whose legal name is Bait al Batterjee Medical Company or “BAB”. SGH is the leading provider of healthcare services in Saudi Arabia, employing over 5,000 staff and operating approximately 1,600 hospital beds. Based on the extensive experience accumulated over the past 20 years, and capitalizing on the opportunities in the private healthcare sector in the MENA region, SGH Group’s sponsors adopted a corporate vision:

- to design, finance, construct and operate 30 world-class hospitals and create 50,000 jobs by the year 2015; and
- to be the dominant regional player in the private medical education by establishing 5 medical colleges by the year 2010.

The Group also has a strategy of collaborating with local partners and bringing institutional investors. In Egypt, Namaa Real Estate Development & Investment, owned by the Olympic Group, will participate as a minority investor. Olympic is a major industrial conglomerate in Egypt, manufacturing and retailing a variety of household appliances and other goods. In Yemen, the local minority partner is Yemenia (Yemen Airways), which is jointly owned by the governments of Yemen and Saudi Arabia. Global Investment House, Kuwait has also a minority stake in the Yemeni venture.

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

The total project cost of the hospital in Egypt is estimated at $75 million. The proposed IFC investment is an A loan (in the form of a Leasing Facility) for IFC’s own account of up to $18 million.

The hospital in Yemen was constructed for $100 million. The proposed IFC investment is an A loan (in the form of a Purchase & Leaseback facility) for IFC’s own account of up to $20 million.

For both financing, IFC will be providing Islamic finance using Sharia’a-compliant instruments. This will be the first Islamic finance structures for IFC in the real sector in general and in the private health sector in particular.

Location of project and description of site

The hospital in Yemen has been built on a 105,000 sq. meter plot of land in an ideally located district of Sana’a near the airport. In Egypt, the hospital will be built on a 37,000 sq. meter plot also within easy access to the airport as well as most major locations within Cairo.

Anticipated development impact of the project

The hospitals in Egypt and Yemen will contribute to:

- expanding access to healthcare in countries which are undergoing rapid increases in their levels of demand;
- relieve some of the growing burden currently placed on the public health system and help stimulate the development of private health insurance;
- offering increased employment opportunities to local healthcare professionals, and others in a superior healthcare environment;
- providing a benchmark of service quality that will potentially raise the general standards of healthcare elsewhere in each country; and
- facilitating international exchange of best medical and management practice across the group - and with the group's international partners.

IFC's expected development contribution

IFC contribution to these projects is expected to:

- help stimulate the growth of the private healthcare sector in both Yemen and Egypt;
- support south-south investments amongst MENA countries; and
- help establish benchmarks for delivery of private health services in the MENA region.

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 these two projects:

- PS 1 Social and Environmental Assessment and Management Systems.
- PS 2 Labor and Working Conditions.
- PS 3 Pollution Prevention and Abatement.
- PS 4 Community Health, Safety and Security and part of PS 5 Land Acquisition and Involuntary Resettlement. The two new sites involve no involuntary resettlement.
- PS 6 Biodiversity Conservation and Sustainable Natural Resource Management does not apply to these projects given the location of the 2 hospitals (i.e. urban settings in Sanaa and Cairo).
- PS 7 Indigenous People does not apply as there are no IPs impacted or involved in these projects.
- PS 8 Cultural Heritage does not apply as there is no cultural heritage impacted by these two projects. The relevant PSs have been provided to and discussed with the client as have the relevant IFC Guidelines (i.e. Healthcare Facilities Guidelines, May 2003; General Environmental Guidelines, July 1998; Hazardous Materials Management Guidelines, December 2001; Occupational Health and Safety Guidelines, June 2003; and Life and Fire Safety Guidelines, December 2002).

This project will comply with both Egyptian and Yemeni ESHS requirements as well as IFC’s Performance Standards and the relevant guidelines.

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