Exclusive: Meridiam eyes 2016 close for Turkish hospitals

Meridiam Infrastructure plans to reach financial close on two more Turkish hospitals before the end of the year, according to project details the French firm shared with Infrastructure Investor.

First in line will be the Elazig Hospital PPP, a 1,038-bed facility in Eastern Turkey. Meridiam is looking to close the €400 million project this autumn, with senior debt raised through an “alternative financing structure”, which the firm says will be a first for the country. Once completed, the Elazig complex will comprise general practice, women, children and psychiatric hospitals as well as a mouth and dental health centre.

Next in line is the slightly bigger Bursa healthcare campus, a 1,355-bed, €530 million project in Western Turkey. The facility will comprise general practice, cardiovascular diseases, oncology, maternity and pediatric hospitals as well as centres dedicated to psychiatry and physical care. Meridiam expects to reach financial close on the PPP before the end of the year.

The hospitals’ likely backers include international funders as well as development finance organisations and multilateral agencies, the firm said. The projects are part of Turkey’s wider hospital programme, a €12 billion PPP scheme backed by the European Bank for Reconstruction and Development (EBRD).

The news comes a few weeks after a failed coup attempt in Turkey, followed by a crackdown that has seen thousands detained and the declaration of a three-month state of emergency. Sources close to the matter said the Ministry of Health remains committed to the hospital programme, with medical centres seen as essential assets that should stay mostly immune to political changes.

A spokesperson for the EBRD told Infrastructure Investor that “the Bank stays engaged and committed to Turkey”. Meridiam declined to comment beyond confirming facts related to the hospital projects.

Along with local developer Rönesans Holding, the firm has played a pioneering role in attracting international financing to make Turkey’s healthcare PPP programme economically viable, starting with the €541 million December 2014 financial close for the Adana Integrated Healthcare Campus.

The package included €433 million in senior debt, comprising 15-year loans provided by international commercial banks and 18-year loans offered by the EBRD, the International Finance Corporation, Germany’s DEG and France’s Proparco. The project marked the first healthcare PPP in Turkey and the first project financing featuring only international lenders, according to Meridiam.

Six months later a consortium led by the firm reached a close on the €137 million Yozgat Education and Research Hospital Project, financed with €110 million in 18-year loans provided by international banks. The project was the first to be backed exclusively by commercial lenders, Meridiam said, with no support from development finance institutions.

For its part, the EBRD last May approved €600 million to help the Turkish government develop its hospital PPP framework, notably through the promotion of non-conventional financing solutions such as equity and debt capital market financing.

The bank has already provided €313.3 million in financing to the Adana, Ankara Etlik and Konya hospital PPPs. It has also approved loans to the pending €766 million Izmir and €409 million Koacaeli hospital PPPs, which are both due to be financed under an 80:20 debt-to-equity structure.