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Johannesburg – Emerging markets will offer lucrative opportunities for newly-listed hospital group Life Healthcare [JSE:LHC] as it plans to expand offshore, according to a health industry analyst.
"There's huge potential for growth in those markets," said Avior Research analyst Mathew Menezes, following the listing of the group on Thursday.
However, the group would have to be cautious as risks are high while medical aid schemes are also underdeveloped in those markets, warned Menezes.
In its listing prospectus, Life Healthcare said it was actively considering opportunities in emerging markets such as Turkey, India and certain areas within the Middle East where it can leverage its skills, systems and experience.
Speaking to TV channel CNBC Africa on the day of listing, Life Healthcare MD Michael Flemming said though the group was still exploring opportunities for expansion outside the continent, Ghana was an attractive market.
That was because the West African country has "a lot of support systems" to enable private hospitals to thrive in the market, said Flemming.
"The problem is that although you're buying high growth potential, you're also paying for high regulatory risks," said Menezes.
According to him, income disparities in some of these emerging markets mean few people earn enough to afford private healthcare.
"They have quite a conservative management," he said. "I think they'll be prudent in their move."
One way of minimising risk in these markets would be through joint ventures with local partners who know the markets quite well.
Menezes said opportunities also abound in local markets through bed space increases, adding the group's better balance sheet - compared to peers Netcare and Medi-Clinic - enables it to embark on expansion projects.
Life Healthcare had to drop its listing price from an initial request of 1 450c to 1 700 cents per share, down to 1 350c due to low demand.
In late afternoon trade on Thursday, shares were exchanged at 1 350c each.
- Fin24.com
"There's huge potential for growth in those markets," said Avior Research analyst Mathew Menezes, following the listing of the group on Thursday.
However, the group would have to be cautious as risks are high while medical aid schemes are also underdeveloped in those markets, warned Menezes.
In its listing prospectus, Life Healthcare said it was actively considering opportunities in emerging markets such as Turkey, India and certain areas within the Middle East where it can leverage its skills, systems and experience.
Speaking to TV channel CNBC Africa on the day of listing, Life Healthcare MD Michael Flemming said though the group was still exploring opportunities for expansion outside the continent, Ghana was an attractive market.
That was because the West African country has "a lot of support systems" to enable private hospitals to thrive in the market, said Flemming.
"The problem is that although you're buying high growth potential, you're also paying for high regulatory risks," said Menezes.
According to him, income disparities in some of these emerging markets mean few people earn enough to afford private healthcare.
"They have quite a conservative management," he said. "I think they'll be prudent in their move."
One way of minimising risk in these markets would be through joint ventures with local partners who know the markets quite well.
Menezes said opportunities also abound in local markets through bed space increases, adding the group's better balance sheet - compared to peers Netcare and Medi-Clinic - enables it to embark on expansion projects.
Life Healthcare had to drop its listing price from an initial request of 1 450c to 1 700 cents per share, down to 1 350c due to low demand.
In late afternoon trade on Thursday, shares were exchanged at 1 350c each.
- Fin24.com
