Brazilian private equity firm IG4 has spent 200 million reais ($38 million) on two recent deals to acquire hospitals through its recently formed OPY Health unit amid the coronavirus pandemic, according to people with knowledge of the matter.
Both hospitals, one in the southeastern city of Belo Horizonte in the country’s southeast which OPY bought in March and another one in the Amazonian city of Manaus whose purchase was finalized on Friday, are part of Brazil’s public health system serving low-income members of the population.
The former was purchased from Brazilian construction conglomerate Andrade Gutierrez and the latter from Spain’s Abengoa SA (ABG.MC). Both sellers are restructuring debt.
OPY is in talks to acquire other six Brazilian hospitals, the sources added, asking for anonymity to disclose private talks. At least two more deals may be announced this year, the sources added.
The hospital in Belo Horizonte has 440 beds and the one in Manaus, 380 beds. The latter were recently converted into ICU units when the city’s healthcare system teetered on the verge of collapse as it suffered from one of the country’s worst outbreaks of the virus. The private equity firm is planning to expand the number of beds in both hospitals.
The hospitals represent first investments of the $250 million fund focused in Latin America raised by IG4 last March, mainly from European investors.
The two IG4 Brazilian hospitals will have average revenue of 220 million reais combined, paid by Brazil’s Ministry of Health. Their EBITDA
margin is close to 50%, according to the sources.
OPY Health follows a model common in the UK and Canada, where private companies own and manage hospitals serving public health services. In the UK, the largest companies are listed, such as Primary Health Properties Plc (PHP.L).
High margins in private Brazilian hospital chain Rede D’Or have previously lured investors such as Singapore’s GIC Pte and Carlyle Group (CG.O).