RH Bophelo’s investment policy is to acquire commercially viable social infrastructure assets. The Company will also consider opportunities in other sectors other than healthcare as they arise. Investments may be by a way of purchasing quoted shares in appropriate companies, outright acquisition or by the acquisition of assets, including the intellectual property of a relevant business, or by entering into partnerships, joint venture arrangements or co-investments.
RH Bophelo may co-invest with the Razorite Healthcare and Rehabilitation Fund or other investors and may invest solely if appropriate. The first R2 billion raised will be used to co-invest with the Razorite Healthcare and Rehabilitation Fund.
RH Bophelo may acquire the whole or part of a company or project (which in the case of an investment in a company may be private or listed) and such investments may constitute a minority or majority stake in the company or project in question. The company may be either an active or passive investor depending on the nature of the individual investments.
RH Bophelo will place no minimum or maximum limit on the length of time that any investment may be held. There will be no limit on the number of investments to be made.
RH Bophelo may offer new shares by way of consideration as well as cash in making investments. The Company may, in appropriate circumstances, issue debt securities or otherwise borrow money to complete an investment.
RH Bophelo will actively manage the investment life cycle of investee companies to maximise the financial returns through appropriate exit mechanisms at maturity of investments.
It is envisaged that, to the extent that debt investments are used by RH Bophelo, these will mostly be self-liquidating through the repayment of capital, whilst equity investments will be realised at full market value through sales.
In the case of investee companies with strong positive cash flow, active growth strategies will be pursued, or alternatively high dividend distributions in order to create annuity type income. In exceptional cases, equity realisation may be by way of initial public offerings and listing of shares on the JSE.
In addition to the use of its own resources, RH Bophelo will employ external financing as a source of capital. RH Bophelo will use borrowings to advance cash flows in order to increase overall returns. The Board will adopt policies from time to time to set limits on the extent of the company’s borrowings. Interest rate movement risk will be mitigated by using inflation-linked rate loans or other hedging instruments. The implementation of such policies and the use of such instruments largely serve to make interest on borrowings a known and controlled expense.
RH Bophelo will use borrowings to fund acquisitions on a case by case basis, and only where it is satisfied that the overall yield from a particular prospective acquisition is or will be greater than the cost of the borrowing required for that particular acquisition, or when the leveraging produces enhanced returns.
RH Managers and RH Bophelo have already been able to secure a R200 million debt facility with Old Mutual, the facility will become immediately available on listing and it will be utilised in pursuit of the acquisition of viable assets.