JOHANNESBURG(Reuters) – South African private hospital firm Life Healthcare is planning a rights issue of up to 10.7 billion rand ($757 million) to fund an acquisition and reduce debt, it said on Tuesday.
Life Healthcare said in November it will acquire 95 percent of Alliance Medical for up to 10.4 billion rand through a temporary loan from Barclays Plc, and South Africa’s Rand Merchant Bank.
The company, the country’s third largest private hospital company, said the equity cash call would represent at least 30 percent of its issued shares and some of its proceeds would be used to pay down the company’s 8.5 billion rand debt.
Demand for private healthcare has risen in South Africa as the fast-growing black middle class take up medical insurance, but concerns about the costs of healthcare has prompted authorities to launch an inquiry and companies to diversify into other markets.
Life Healthcare, which vies for with Mediclinic International and Netcare, said the rights issue would put it on a sound financial footing to pursue expansion and continue paying dividends.
Shares in Life Healthcare were up 0.63 percent to 31.87 rand by 0859 GMT.
($1 = 14.1324 rand)
($1 = 0.8081 pounds)
(Reporting by Nqobile Dludla, editing by Louise Heavens)