The Abraaj Group exits investment in leading Thai Hospital

The Group sold its stake in Vejthani to the South East Asian healthcare chain KPJ Healthcare. This was the second successful exit in the last six months for the Group in the rapidly expanding private healthcare sector.

The Abraaj Group is one of the leading private equity investors in healthcare facilities in growth markets, with a current portfolio of nine hospitals around the world, including in India, the Philippines, Kenya and Nigeria. The Group's track record in delivering strong growth in healthcare investments was underlined last year by its exit from Malaysian hospital operator IHH Healthcare Berhad. Abraaj exited the investment through a dual IPO on Bursa Malaysia and the Singapore Stock Exchange which raised approximately $2bn in total, and was the third largest IPO globally at the time of listing.

The Abraaj Group acquired its stake in Vejthani in 2009. The investment was designed to capture increased demand within Thailand for international standards of medical treatment, as well as the growing healthcare tourism market. In particular, the Group identified that rising middle class incomes in Russia, the Middle East and Africa would drive demand for high quality healthcare, more competitively priced than might be possible locally or in private healthcare facilities in Europe and the USA.

The Abraaj Group's investment in Vejthani transformed it from a local general hospital to a multi specialist hospital, growing from seven specialty clinics in 2007 to 22 clinics today, offering treatments including Total Joint Replacement, Bone Marrow Transplants and Pediatric Treatment. Along with the new specialties, Vejthani also added 80 new doctors and raised the qualification levels of its clinical staff to better reflect its growing domestic and international clientele.

The Group further initiated a program of training and staff development to improve standards of care in the hospital. The training program helped Vejthani to achieve international benchmarks for the standard of care offered, including the Joint Commission International (JCI) accreditation.

The changes facilitated by The Abraaj Group have transformed the hospital's customer base. Vejthani attracted new patients from other Bangkok hospitals and the proportion of international patients increased from 10% of patients in 2007 to 45% in 2011. The shift towards higher value medical treatments, as well as the Group's improvements to the effectiveness of the hospital's business management, helped to deliver a three-fold increase in profits.

Commenting on the exit, Omar Lodhi, Partner and Asia Head, The Abraaj Group, said: "Our investment in Vejthani has helped it transform into a specialized hospital with best in class international standards including JCI accreditation to capitalize on the rapidly growing trends in medical tourism and also meet the needs of Bangkok's growing middle class for a better standard of medical care. The hospital has increased the availability of specialist treatment in the international space and succeeded in winning new patients. The success of our investment provides further validation of our conviction that quality healthcare is one of the most exciting opportunities across growth markets. The emergence of a middle class across growth markets has in our view created permanent demand for quality healthcare, which in many countries cannot be fully addressed by the public sector."

In addition to its hospital portfolio, The Abraaj Group has invested in the broader healthcare sector including pharmaceutical and medical devices manufacturers and diagnostic service providers. These sectors are all set to benefit from increases in consumer spending on accessible and quality healthcare.