Dubai-based TVM Capital Mena is the first international private equity house focusing on healthcare to set up operations in the Middle East and North Africa (Mena) region.

The firm was founded in late 2009 and established two businesses in the UAE – a medical centre and an in-vitro-fertilisation clinic (IVF). It plans to expand further to meet growing GCC demand for specialised private healthcare services.

“There is a tremendous demand for highly differentiated services in emerging markets worldwide where there is not a mature healthcare system,” says Helmut Schuehsler, chief executive officer (CEO) of TVM Capital Mena. “Especially in the Middle East, there is an interesting move away from everything being government funded to the introduction of compulsory private insurance.”

Fund close

In May, the company achieved the final closing of its TVM Healthcare Mena I fund at $50m. Crescent Enterprises, a subsidiary of the UAE-based Crescent Group, and a group of Mena businessmen advised by Dubai-based Alcazar Capital joined the fund as investors, along with three founding international investors: International Finance Corporation (IFC); GE Healthcare; and The Olayan Group. The three firms invested in the initial $30m healthcare fund.

Schuehsler says the business environment for private equity funds is still tough as markets remain volatile since the 2008 financial crisis, but he is confident that the firm can continue to raise money to expand.

“We had to start somewhere and we started small. At $50m, it is not a big fund by TVM Capital’s standards, but it’s a good starting point. We can do a couple of good deals and show investors we can do it and execute on the ground, then I believe they will offer us more money,” says Schuehsler.

We are active in the market and at some time we will venture out of the UAE into other countries

Helmut Schuehsler, TVM Capital Mena

Parent group TVM Capital, headquartered in Munich, Germany and Montreal, Canada, has raised more than $2bn in capital from investors in Europe and North America since 1985. One of TVM Capital Mena’s original investments was the ProVita International Medical Centre in Abu Dhabi, which offers long-term care for ventilated patients and those requiring continuous medical and nursing intervention for serious medical conditions. The facility allows ventilated patients to live outside hospital intensive care units.

Schuehsler says that ProVita turned profitable within four months of it being established in February 2011. “We are still hiring nurses and we are currently expanding into Al-Ain, so our facility in Abu Dhabi is almost full and we have been working on our expansion for a couple of months. We expect to complete the facility in Al-Ain in the fourth quarter,” he says.

The second business is the Bourn Hall Clinic, which specialises in IVF treatment and was founded by Bob Edwards, who oversaw the first successful IVF birth in the UK in 1978.

TVM Capital Mena’s first Bourn Hall Clinic was established at Kochi in Kerala, southern India, in September 2011 and it is in the process of opening additional clinics in Delhi and Dubai.

Schuehsler says he is expecting to receive the licence for the Dubai clinic before the end of August. The 20,000 square-foot facility at the Sheikh Hamdan Center in Dubai will be the company’s reference centre for the Mena region.

“The early signs are that there is excellent demand … not only in Dubai, but also in surrounding areas such as Abu Dhabi, Al-Ain and in other GCC countries,” he says.

“Not all governments in the Gulf are affluent to the same degree and therefore people taking care of themselves is a very important concern today for the public sector. There is an opportunity to complement what the governments are doing with private healthcare operators and that’s what we are focusing on now.”

Private equity expansion

While the size of TVM Capital Mena’s fund is relatively small compared with TVM Capital’s European and North American funds, it has plans to expand further in the region both geographically and through new types of services and products.

“We will embark on three or four more investments. We are currently working on several and we will see which matures first,” says Schuehlser.

“We are very active in the market and at some point we will venture out of the UAE into other countries in the Gulf. We are looking at several activities … we are targeting medical device companies, hospitals, specialised clinics and pharmaceutical projects.”

TVM Capital Mena must now show its investors that specialist healthcare facilities in the UAE can be profitable before expansion can take place.

If successful, the fund could pave the way for further private equity healthcare investments in the GCC, where growing populations and economies will demand increasingly more specialised medical facilities.