Aureos Capital invests Sh228m in medical equipment maker

Investment fund Aureos Capital has expanded its footprint in Kenya’s healthcare industry through a $2.75 million (Sh228 million) investment in Revital Healthcare, a medical equipment manufacturer.

Aureos Capital, through its healthcare firm Africa Health Fund, completed its investment in the Mombasa-based medical equipment manufacturer last December.

Revital’s management at the time said that the capital injection would help the firm increase production of auto-disposal injections, its core area.

The firm also manufactures blood collection tubes, feeding tubes and other medical disposable products.

Aureos Capital’s investment will see the firm expand and create an additional 350 jobs and extend its regional grasp.

“Revital is present in eight African countries and one Asian country and with Aureos’ support Revital expects to be present in at least 20 countries,” said Revital Healthcare chief executive Rajni Vora.

The Mombasa-based plant said that its expansion is meant to give hospitals and clinics across eastern, central and southern Africa a cheaper source of disposable syringes other than Europe and Asia.

Investors in the healthcare industry said that the regional market is attractive due to high returns that match other industries, offering double-digit returns within a short period.

Resolution Health chief executive Peter Nduati said that while it may be difficult to pin-point the exact returns in manufacturing or healthcare provision, on average returns in the sector are three times.

Mr Nduati said that private equity funds that venture into the healthcare sector in the East Africa region stand to get three times what they invested within a period of between four and five years.

This is the case for all sub-sectors in the industries where investment is short-term.

“There is a huge gap in healthcare facilities clinics and manufacturing and it makes it a very good area for private equity funds to invest in,” said Mr Nduati.

Prior to the latest investment Aureos Capital put $2.5 million (Sh206 million) in the Avenue Group last November, which runs in and outpatient hospitals in Nairobi and with plans afoot to expand to other major towns.

In early 2010, Aureos Capital bought a stake in the Nairobi Women’s Hospital for Sh200 million.

Health providers, however, said that the cost of production just like in many other industries may be the main challenge.

Louis Machogu of online pharmacy Drugs.Co.Ke said that Asian products are cheaper than those made in Kenya but this is not a handicap in growth of the medical equipment manufacturing industry since importation also has its disadvantages.

“There is the issue of lag time. We are always running out of needles and gloves and if they can assure the local market of supplies it can be a strong point for them,” said Dr Machogu.

Dubai-based Abraaj Capital recently bought Aureos Capital and the merger will see the firm have $7.5 billion spread out in 30 countries.