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Abraaj invests in Pakistani diagnostics business

The emerging market specialist returns to Pakistan for a debut in the healthcare sector, after agreeing to sell its stake in local utility K Electric for $1.8bn last October.

The Abraaj Group has invested in Islamabad Diagnostics Centre, a Pakistani diagnostics chain, through a number of its funds.

The business operates 20 centres across the Asian country, providing affordable services across Islamabad, Rawalpindi, Wah Cantonment and Hasan Abdal. It is the only diagnostic centre in the capital that provides lab and imaging services on a 24/7 basis all year round.

The company plans to expand its operations across Islamabad, Rawalpindi and additional cities in the Punjab province. It aims to grow its network to over 50 centres in the next five years, Abraaj said.

The firm pointed out that Pakistan has a relatively underfunded public healthcare system, which is not sufficient to meet the demand created by the sixth-largest population in the world.

“The diagnostics market is extremely fragmented with less than 10 players across the country with more than 20 centres. There are more than 200,000 potential healthcare referral points in Pakistan, yet less than 6,000 diagnostic service providers, leaving significant room for the sector to grow and meet market demand,” added Abraaj.

The investment marks the Dubai-based firm’s first investment in Pakistan’s diagnostics sector and the fourth one across the globe. Financial details were not disclosed and it was unclear which of Abraaj’s funds were involved. The firm had not responded to queries at press time.

The fund manager said it has so far deployed over $1.2 billion globally in 29 investments across the healthcare spectrum in developing markets. In addition to this investment, the firm also holds three other assets in Asia, including two in India and one in Bangladesh.

In November, Infrastructure Investor reported that Abraaj was forging ahead with efforts to raise its $1 billion Growth Markets Health Fund, its debut vehicle focused on healthcare. The International Finance Corporation has made a $150 million commitment to the fund, which would predominantly invest in South Asia and sub-Saharan Africa, according to public documents by the institution.

IFC’s pledge followed its $20 million commitment to a Pakistan-focused vehicle being raised by Abraaj, the Abraaj Pakistan Fund I, last October. The $200 million, closed-ended private equity fund will target mid-cap private companies operating in consumer-driven sectors with potential for regional growth, IFC said. The vehicle was expected to make eight to 10 investments, with ticket sizes ranging between $5-40 million.

Abraaj last October agreed to sell its entire 66 percent stake in K Electric, a Pakistani power utility, to China’s Shanghai Electric Power for $1.77 billion. It is one of the largest private sector transactions in the country to date.