THE GHOST TRAIN
THE FINANCE GHOST: Are private hospitals on the mend?
After several years of unhealthy business choices, Netcare and Life Healthcare are looking more robust — which could be contagious for Mediclinic, in a good way
Ask anyone about lucrative sectors to invest in, and it’s very unlikely that hospitals will feature prominently. In fact, they will probably not be mentioned at all — unless you’re speaking to Remgro executives. After participating in a deal to take Mediclinic private, they believe strongly in that opportunity; and if recent updates in the sector are anything to go by, then the Remgro crew might be onto something.
Setting the scene with a 10-year share price view is most unfortunate for Netcare and Life Healthcare, as both stocks peaked roughly a decade ago. That was a frothy time on the JSE, with institutional investors putting pressure on management teams to diversify globally and get their money as far away from Jacob Zuma’s ANC as possible. The hospital groups were only too happy to oblige. When acquisitions are justified by push factors rather than pull factors, you’re going to have a bad time. Sure enough, both companies have lost roughly two-thirds of their value s...
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