New healthcare firm faces big task

New listed healthcare company RH Bophelo is targeting South Africans who cannot afford exorbitant private healthcare costs, but are willing to pay for affordable quality care, although analysts said the company needed to prove it was up to the task.

New listed healthcare company RH Bophelo is targeting South Africans who cannot afford exorbitant private healthcare costs but are willing to pay for affordable quality care, though analysts say the company needs to prove it is up for the task.

On the eve of the company’s listing, the CEO of SA’s first black-owned and blackmanaged healthcare company, Quintin Zungu, and chairman John Oliphant said it would generate revenues by servicing large numbers of patients.

The company, which will list initially as a special purpose acquisition vehicle, has raised R500m, which will be used to acquire infrastructure assets.

The share is expected to begin trading at R10 when the company lists on the JSE on Wednesday. While on its expansion trajectory, the share will not offer dividends for at least the next three years.

Zungu said the company would be working with small and independent hospitals mostly in peri-urban areas and not on prime properties.

At least 20% of the people using public-sector facilities would be willing and able to afford low-cost healthcare and alleviate the pressure on government resources, he said.

An equity analyst at Mvunonala Asset Managers, Matthew Zunkel, said there was big demand for such a product but that the company would thrive only if it managed to find enough deals to make.

But Zunkel added that given the experience of the management team, it would not be long before the company announced its first deal.

A portfolio manager at Gryphon Asset Management, Casparus Treurnicht, said that if RH Bophelo could find a good existing operation at an acceptable price tag, and manage its workforce well while providing synergies, then it might have something in store for investors. “But this will take time to prove and our economy will definitely throw them into the deep end,” said Treurnicht.