Low-cost hospital group RH Bophelo lists in Rwanda

Black-owned hospital group, RH Bophelo, is spreading its wings to East Africa in hopes that more investors will back its low-cost healthcare model. The company announced on Tuesday that it will be making a secondary listing on the Rwanda Stock Exchange on 1 June.

“We want to improve quality of healthcare in Africa. But obviously we have to win and get it done in South Africa first before we can export the model. Covid-19 has shown us that healthcare needs to be disseminated to everyone,” said RH Bophelo CEO, Quinton Zunga.

The group, which now owns nine hospitals and manages six on behalf of smaller standalone hospitals, has been listed for almost three years on the JSE. Over that time, its shares have fallen 2.4{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} while Netcare, the largest hospital group in the country, has seen its shares lose more than 44{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} over the same period. The other hospital groups, Mediclinic and Life Healthcare Group, also recorded 53{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} and 31{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} declines respectively.

Through its network of hospitals is strategically located in high-density areas and peri-urban centres, the company predominantly targets lower and middle-income earners who ordinarily cannot afford medical aid, but also do not want to rely on state hospitals.

While the high cost of private healthcare in SA has over the years drawn the ire of many, including regulators, Zunga said he believes that the cost is pushed up because most people are sold high-end comprehensive cover they don’t use.

“The trajectory we are on is developing that platform and increasing our penetration of affordable products to bring it all together and create a low-income integrated hospital group. The big incumbents are serving the high-end but nobody is covering the low-end,” said Zunga.

The hospital group has acquired Generic Insurance, a company that also sells hospital and medical insurance cover. This way, it will be able to sell cover to most of the people who visit its hospitals who cannot afford medical aid. However, that plan hinges on continued existence of these insurance products in SA as the regulator mulled their possible ban late year.

He said the group will use its access to East Africa investors to entrench this model in SA. Thereafter it will look at building a portfolio of hospitals and healthcare services in that market too in the longer-term.

Zunga said the Rwanda Stock Exchange became an obvious choice because the country is in the process of establishing itself as a financial services hub for the East Africa region and its regulations “are very friendly”.

The other pull factor is that in East African stock exchanges, investors can trade stocks in another country, meaning RH Bophelo can attract investors in neighbouring countries like Kenya, Uganda, and Tanzania. Initially, RH Bophelo will not opt for capital raising on the day it lists, but it will at a later stage when it has acquainted itself with that market and its regulators.

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