IFC (International Finance Corporation), the private sector investment arm of the World Bank, has paid $5m to purchase a 20% stake in the private medical service company MedLife, securing the deal through a complex financing structure.
Under the terms of agreement, the IFC will also grant a loan to MedLife worth 5 million euros over a ten-year period, with a three-year grace period.
"MedLife is the first investment IFC has developed in the domestic medical market. Countries such as Romania are still developing, meaning that people's needs for medical healthcare will rise," stated Guy Ellena, IFC health and education officer.
Prior to the transaction with IFC, MedLife's shareholders were the pediatrician Mihaela Gabriela Cristescu, who held 30% of the shares and her two sons, the company's general manager, Mihail Marcu, 40%, and Nicolae Marcu, 30%, also a pediatrician. The three shareholders sold shares in equal proportion to IFC.
The money will be used to extend MedLife's services to other parts of the country. Over the following three years, the company will develop hospitals and clinics that can accommodate 40-50 beds, in several cities around the country.
The investment will amount to 25 million dollars, 14 million dollars of which will be raised from the company's own funds, as well as from profits derived by MedLife. MedLife's plans for extending their network around the country will be developed in two phases. In 2006-2007, MedLife will open Memorial Hospital Timisoara, as well as another two sites in Iasi (Hyperclinica Iasi) and Cluj.
The company intends to be listed on the Bucharest Stock Exchange, which is likely to happen in the first half of 2008.
"In the wake of our listing, new sources of financing will occur, which will be used to expand our network. There are many localities such as Galati, Oradea and Arad where we are not yet present," said Mihail Marcu, general manager of MedLife.
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