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Health-care workers get 10% stake in Netcare
Tamar Kahn
2005-04-22

SAs biggest private hospital group, Network Healthcare Holdings (Netcare), said yesterday that it would sell a 10% stake in the company to black investors and employees in a deal worth about R1bn.

The empowerment deal has ignored big-name black investors and instead focused on staff. Although the historically white health-care sector has lagged behind other industries in bringing in black players, the past year has seen increased activity on this front as companies move to comply with government pressure to broaden their ownership. The Netcare deal will see the 10% stake sold to five new trusts: Mother &

Child, a community organization (7,5%) Healthy Lifestyle, which will run township clinics (5%) Patient Care (37,5%) which will be made up of Netcare nurses and paramedics Passionate People (20%), which is comprised of management and staff and Physician Partnerships (30%), which represents doctors. We want to give the shares to the people around the bed, said Netcare CEO Jack Shevel. He said that Netcare had considered bringing in black-owned companies in the health-care sector, but felt it was important to bring in as many people as possible. About 45 000 people stood to benefit from the deal. Giving workers a stake was an important part of Netcares staff-retention strategy, he said.

Shevel declined to provide details on the mechanism by which the various trusts would acquire their stakes in Netcare. Each trust has a different need. We may, for example, do a buy-back for the doctors, and a share issue for the nurses, he said. Currently 19% of Netcares shares are in black hands (directly, and indirectly held by institutions with black shareholders), of which thelions share is held by the Public Investment Corporation, which has 12%. Shevel said the deal that was announced yesterday would see some dilution because of the issuing of new shares, and that it was expected to result in 15% of the company being directly owned by blacks. The company aimed to have 25% of its equity in black hands by 2010, he

Netcare has also set itself staff and management equity targets, and it aims to have blacks constituting one third of its executive board members by 2008, and 40% of its non-executive board members by 2010. We (also) envisage the negotiation of additional public-private partnerships at provincial and municipal levels to include black economic empowerment partners, said Victor Litlhankanyane, Netcares head of transformation.

Netcares rival, hospital group Afrox Health (Ahealth), finalized its 19-month efforts to bring in a black economic empowerment partner in March. This came about after the Competition Tribunal gave Ahealths parent, African Oxygen, the go-ahead to sell its 69% stake in the company to a consortium. The consortium includes Business Venture Investments (Mvelaphanda, Brimstone and a doctors group), Rand Merchant Bank Private Equity, Old Mutual Life Assurance and the Industrial Development Corporation.

(Source: Business Day, April 22, 2005)

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