Brimstone increases stake in Obsidian Health to 80% | Fin24

Brimstone increases stake in Obsidian Health to 80%

Feb 10 2020 14:36
Carin Smith

Brimstone Investment Corporation on Monday announced that it acquired a further 55% stake in Obsidian Health for R35.7 million in cash.

This increases its total shareholding in Obsidian Health, a healthcare supplier in both the private and public sectors in sub-Saharan Africa, to 80%.

The product portfolio includes capital equipment and medical devices used for cardiology, cardiovascular, theatre, ICU and high care, as well as orthopaedics as well as point of care (POC) diagnostic testing.

Mustaq Brey, CEO of Brimstone, told Fin24 that it takes a long-term partnership approach to its investments. In its view, this model has delivered real shareholder value while advancing effective transformation and inclusive empowerment.

Obsidian Health has long-term partnerships with a number of multinational healthcare companies in sub-Saharan Africa. It is the exclusive distributor of healthcare brands including Ansell, Abbott Point of Care, Erbe, Serres, Integra Life Sciences and AE Medical, and is the remaining portion of the medical division of The Scientific Group, in which Brimstone was an investor for close to 20 years.

"Obsidian Health is an example of how we have increased our stake over time to a very meaningful position in a good business. The (latest) acquisition is in line with our strategy of having control or significant influence and increasing our portfolio of unlisted assets," said Brey.

"Having been invested in the health industry for a very long time, we have a deep understanding of the dynamics and metrics of this business and will continue to add value and benefit Obsidian Health with our strong empowerment credentials."

Brey sees potential for further developing Obsidian, he added, saying the latest investment is part of Brimstone's approach of investing in some unlisted companies. He foresees that it might invest in some more unlisted companies going forward.

"We have invested in the health industry for many years. It is a steady industry - all people have medical issues. Furthermore, the National Health Insurance (NHI) will likely bring more opportunities for which we feel we will be well situated," he said.

In September last year Brimstone reported a loss of R84.3m for the six months ended June 30, 2019. At the time, Brey told Fin24 this was a significant improvement from the loss of R227.1m in the prior period. He is hopeful the group will be in positive territory by the end of the financial year.

At the time, Brimstone’s 25.1% stake in Obsidian Health contributed R1.8m as its share of profits during the interim period.



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