Post on 08-Mar-2020
STRICTLY CONFIDENTIAL
DRAFT
Sourcelink: an investment by IFHA
Max Coppoolse
Lisbon, 9 June 2011
STRICTLY CONFIDENTIAL 2
Overview - IFHA in a nutshell
IFHA: the first ever Private Equity (PE) fund focused on health care in Africa
Fund size: EUR 50.1 m from well-known private and public investors.
Investment strategy: equity investments in private health care companies, e.g. health insurance, pharmaceutical distribution and care provision.
Corporate governance: solid structure including advisory committee, investment committee and supervisory board.
The IFHA team: 7 professionals with substantial experience, including one team member in South Africa.
Expected to be 75% invested by early 2012.
Targeted IRR of 20%.
Shareholders:
1st closing: FMO, Goldman Sachs, SIFA
2nd closing: AfDB, IFC, APG, Pfizer
STRICTLY CONFIDENTIAL 3
Overview – Environmental & Social policy
IFHA ‘s investments have to meet strict criteria in order to safeguard compliance with E&S
guidelines. Apart from that, IFHA has developed its own development impact matrix.
Goal 1: Eradicate extreme poverty & hunger
Goal 2: Achieve universal primary education
Goal 3: Promote gender equality & empower women
Goal 4: Reduce child mortality
Goal 5: Improve maternal health
Goal 6: Combat HIV/AIDS, malaria & other diseases
Goal 7: Ensure environmental sustainability
Goal 8: Develop a global partnership for development
IFHA’s Development Impact Matrix is based on
the Millennium Development Goals
IFHA’s E&S policy includes:
Compliance with IFHA’s exclusion list
Compliance with national laws on environment, health, safety and social issues
Compliance with IFC performance standards
1. Social and environmental assessment
and management system in place
2. Labor and working conditions
3. Pollution, prevention and abatement
4. Community health, safety and security
■ Identify risks, impacts and opportunities
■ Development impact matrix
STRICTLY CONFIDENTIAL 4
Health in Africa: positive investment climate
Hygeia
€ 2.0 m
Pyramid
€ 1.4 m
Strategis
€ 0.6 m
Hello Doctor
€ 1.1 m
AAR Group
€ 7.0 m Nigeria
Tanzania
Kenya
South Africa
Sourcelink
€ 2.1 m
Status mln EUR
Invested 7,4
Second disbursements 2011 6,8
Planned investments 2011 20,8
Follow-on investments 2012 11,3
Total 46,3
Current investments
Investments and second
disbursements total EUR 14.2m.
Planned investments for 2011
represent another EUR 20.8m.
These investments will generate
EUR 11.3m follow-on
investments in 2012.
Apart from the above, there is a
continuous pipeline of new
opportunities.
We believe that this
demonstrates the strong need
for private health care financing.
IFHA’s pipeline is well filled
with investment opportunities
STRICTLY CONFIDENTIAL
After investing 10% of total commissions, TVPI is
already positive
5
-
0,20
0,40
0,60
0,80
1,00
1,20
7/02/07 31/12/07 31/12/08 31/12/09 30/06/10 31/12/10
Total Value Paid In (TVPI)
The total value of portfolio companies as of end 2010 already exceeded the total cash called from investors (TVPI of 1.1).
STRICTLY CONFIDENTIAL 6
IFHA’s manufacturing policy: partnering with TEVA and
Sourcelink
IFHA and TEVA will launch a PAN African production plan in at least 7 countries,
including Nigeria, Ghana, Kenya, Tanzania and Namibia. This would lead to (1) increased
availability of pharma products, (2) alignment with donor policies looking for local
sourcing, (3) preferential treatment of local producers for public tenders, and (4)
fulfillment of national policies to attract production facilities to the African continent.
Kenya
Nigeria
Tanzania
Ghana
Namibia
Planned production locations
Teva Pharmaceutical Industries Ltd.:
Among the top 15 pharmaceutical companies worldwide, with sales of USD 16.1 billion in 2010, of which 80% in US and Europe.
Teva produces generic drugs in all major therapeutics and steriles in a variety of dosage forms, from tablets and capsules to ointments, creams, and liquids.
In addition, Teva manufactures branded drugs in niche markets (30% of sales), such as Copaxone for multiple sclerosis and Azilect for Parkinson’s disease.
Headquarters in Israel, production facilities worldwide with around 40,000 employees. Direct operations in 60 countries, including 61 manufacturing sites and 28 R&D centers.
South Africa
Sourcelink
Teva
Morocco
Kenya
Sourcelink
IFHA TEVA Sourcelink
Market studies Registrations and files Technical assistance
Required local licenses Specifications and design Manufacturing equipment
Selection of location Selection of products Certification
Financial investment Technical support Take-off turnover
Management support
Division of tasks & responisbilities
Sourcelink Healthcare (Pty) Ltd
• October 2010 - IFHA was approached by Singaporean company Sourcelink Holdings to assist in its expansion plans into Africa.
• Sourcelink (SL) were interested in the African market for their infection control products but needed a partner with financing and more important local knowledge and networks.
• SL had a choice of finance partners but chose IFHA because of African network, healthcare expertise and local knowledge.
• By March 2011 a deal had been closed and all agreements signed to start Sourcelink Healthcare Africa.
Introduction
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• Established in 2004 • Headquartered in Singapore • To list on Hong Kong Stock Exchange in 2011 • Integrated healthcare company providing:
– Primary healthcare – Specialist oncology services – Medical supplies and pharmaceutical distribution – Disposable manufacturing and distribution
• Controls over 80% of Singaporean market in gowns and masks • Export of masks and and gowns to:
– SE Asia – China, Indonesia, Vietnam, Thailand – Europe - Russia – USA
• Innovative production technology • Innovative product designs • Established brands and trademarks
Sourcelink Holdings - Singapore
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Sourcelink Healthcare (Pty) Ltd
• Sourcelink Healthcare was set up in South Africa to manufacture and distribute disposable infection control products
– Masks
– Gowns
– Bed linen
• Shareholding
– IFHA 80%
– Sourcelink 20%
– Each party to give up 5% for management incentive
• IFHA to provide finance - $3 million
• Sourcelink to provide:
– Finance $500,000;
– technology transfer; and
– 50% off-take agreement
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South African facility
• Based in a light industrial park – North Riding – Gauteng South Africa
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South African facility – quality standards
• SA facility will need to get following accreditation:
– ISO 9001 (management systems)
– ISO 13485 (medical devices)
• Products in turn will get – CE mark (European)
– FDA approved for USA
• Comply with IFHA environmental and Social responsibility standards
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Mechanized manufacturing manual packing
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Sourcelink products
• High Quality 3 ply mask
• Ear loop
• Capacity of SA plant: 25m p.a.
• Gross Margin of 35%
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Masks Gowns
• Impervious protective gowns
• Used in Emergency wards, surgery
• Latex free
• Perforations for ease of removal
• GM of 47%
Bed linen
• Elasticated fitted sheets – size made to order
• Pillow slips
• Impervious and latex free
• GM of 22%
Financials – set up costs & working capital
Item Cost (US$)
Capital equipment 1,600,000
Raw material and small capital items 400,000
Training and equipment installation 400,000
Renovation of facility 100,000
Total set-up costs 2,500,000
Working capital 1,000,000
Total investment 3,500,000
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Financials – projections (US$)
Year 1 Year 2 Year 3 Year 4
Revenue 6,000,000 9,000,000 10,000,000 10,500,000
COGS 4,000,000 6,000,000 6,500,000 6,500,000
Gross profit 2,000,000 3,000,000 3,500,000 4,000,000
Overhead costs 890,000 920,000 970,000 1,000,000
EBITDA 1,110,000 2,080,000 2,530,000 3,000,000
Assumptions:
• Year 1 starts once full capacity possible
• Capacity at 2 shifts only
• Facility can sell at only 80% capacity
• No additional lines of equipment installed
Additional growth through:
• Increase to 3 shifts
• Sell at 100% capacity
• Expand facility to add additional lines e.g.
additional mask machines
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Sourcelink – exit strategy
• Sourcelink Holdings Singapore to buy IFHA out – Have PUT and CALL options
• Trade sale to larger regional or multinational medical manufacturer
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