SGH II

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	26739
Company name	Bait Al Batterjee Medical Co.
Country	MENA Region
Sector	Health Care
Environmental category	B
Department	Health and Education
Status	Active

Date SPI disclosed	October 23, 2008
Projected board date	November 24, 2008
Previous Events	Invested: February 25, 2009 Signed: February 12, 2009 Approved: February 3, 2009

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project entails the expansion of Saudi German Hospitals Group (“SGH” or “the Group”), a leading provider of healthcare services in the Middle East and North Africa (“MENA”) region. The Group commenced operations in 1988, with its first hospital in Jeddah, Saudi Arabia. Currently the Group has a regional network of five hospitals, four training and nursing institutes and one medical college located in Saudi Arabia and Yemen. The Group has developed an ambitious long-term 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.

In order to meet these long-term goals, the Group is embarking on a multi-phase expansion plan to enhance its presence in its existing hospitals and move to new markets. The Group’s expansion plan includes:

- a 150 bed hospital in Hail, Saudi Arabia;
- a 300 bed hospital in Cairo, Egypt;
- a 315 bed hospital in Dubai, UAE;
- a chain of thirty specialty clinics in Cairo;
- a 100 – 150 bed hospital in Addis Ababa, Ethiopia; and
- a nursing school in Cairo.

Anticipated development impact of the project

This project has the potential for significant developmental impact through:

- Delivery of high quality healthcare services to underserved areas in the target countries: The need for high quality healthcare is acute in Egypt and Ethiopia. SGH’s expansion will bring much needed capacity and new services to the MENA and Africa regions.

- Increase availability of high quality private medical universities and training school throughout the MENA region: A key health challenge in the MENA and Africa regions is the shortage of skilled medical personnel, in particular nurses due to a lack of training institutions and migration out of the region. In addition to healthcare services, the Group is focused on medical education, training in nursing and allied sciences.

- Demonstrate best practices throughout the medical community: SGH’s focus on quality in both patient care and management will make it a leader—and thus a point of reference—in the MENA and Africa regions. The Group is aiming to achieve JCI accreditation by 2009, and plans ultimately to bring all of its hospitals to this standard.

- Increase in Foreign Direct Investments: Such FDIs are extremely important for the countries in increasing the confidence in the local economies and also strengthening south-south cooperation.

- Extend public health and education programs: In addition to providing high quality care, SGH has extensive public health and education programs, which are offered free of charge to the community. Activities include community programs in HIV/AIDS, drug abuse, and maternal and child health.

IFC's expected development contribution

IFC’s investment is expected to have the following contributions:

- Through this investment, IFC will be actively contributing to improving access to quality healthcare services in MENA and East Africa and promoting private healthcare development.

- Through its equity investment, IFC would be able to further contribute to improving the corporate governance and operating practices of the Group’s hospitals, in which the sponsor has expressed interest.

- Long term financing to private hospitals is not available in the target countries. IFC’s financing will have two main impacts. Firstly, it will allow SGH to utilize external funding sources to supplement internally generated funds and new equity injection to complete the expansion in a shorter time frame. This will allow it to offer healthcare services earlier to its target communities. More importantly, it will have a strong demonstration effect among the local financial institutions who may be encouraged to consider providing longer term financing respectively to this vital sector.

- SGH sees value in IFC’s participation, particularly its global experience in financing healthcare companies and its expertise in and knowledge of the private healthcare sector in developing countries. In particular, SGH will benefit from IFC’s experience in sub-Saharan Africa as the Group begins its project in Ethiopia and continues to expand in the Africa region.

Environmental and social issues - Category B

This project has been classified as a Category B project according to IFC’s Environmental and Social Review Procedure. The SGH Group will manage environmental and social risks in accordance with the IFC’s Performance Standards on Social and Environmental Sustainability.

In this context, the Group will implement internationally accepted design standards and good hospital management practices in terms of life and fire safety including emergency response; disinfection, sterilization, hygiene control mechanisms required to prevent infections among patients, employees or students; provision of training to the employees and students; appropriate potable water supply; housekeeping; hazardous materials handling and minimization; waste, emissions and effluents minimization and proper disposal.

The Group will look for energy efficiency and other resource conservation opportunities and will be required to develop and implement a corporate-wide, integrated environmental, health and safety management systems. The Group undertaking several community outreach programs in its existing facilities, will extend these programs to the new locations of activities and will always be disposed to provide emergency care for the poor and disadvantaged communities.

IFC PROJECTS

RECENTLY DISCLOSED