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Interview with CEO of Elevate Healthcare Africa

In April 2021, Elevate Healthcare JV, a joint venture between Elevate Private Equity and Misr Capital, launched Elevate Healthcare Fund and Nile Misr Medical Holding, a $380 million healthcare investment platform that aims to invest in various areas of healthcare, not just in Egypt, but across Sub Saharan Africa in general.
The fund aims to actively pursue M&A transactions in the highly-fragmented healthcare spaces across its targeted jurisdictions. But how did a local diagnostics company grow into a major healthcare investment platform?

Arab Finance sat down with Dr. Tarek Moharram, the Group CEO of Elevate Healthcare Africa, to discuss his company’s vision, the fund’s mission, the various areas Elevate is focusing on for investment, as well as share his insight and provide a bird’s-eye view on the state of Egypt’s growing healthcare market and its potential investment opportunities.

Let’s start by talking about the company’s background. How did this all get started?

Nile Scan & Labs Company was incorporated in 1995, so we are about 26 years old now, with the first facility located in Maadi. The company was founded by my late father Professor Doctor Hazem Moharram, who was medically one of the top legacies within the radiology sector across Egypt, Middle East, and Africa. He was also a brilliant visionary when it came to medical management and entrepreneurship.

We started to grow organically, opening in Dokki, Heliopolis, Downtown, and Shiekh Zayed. The focus has always been on providing quality medical care, and I remember he would often say that his goal was to create an oasis for providing premium healthcare services in the country on par or exceeding that of the US or Europe. He wanted to ensure that if our patients were to take their scans or reports to consult with a doctor abroad that the doctor there would not require the patients to repeat any of the tests, ultimately satisfied with the quality, and just proceed from there.

I’m glad to say he was successful building this reputation, which brought along with it our rising market share. Our equipment is all state-of-the-art just as you would typically find in any reputable diagnostics center abroad, and the same goes for all our reporting. We have continuous ongoing trainings for our staff and doctors, who travel abroad to attend seminars, trainings, and exhibitions. Likewise, we regularly receive top medical professionals from abroad who conduct trainings and seminars here locally.

With all that effort, the business grew, albeit very conservatively since there was this obsession with prioritizing quality of the service. He was very meticulous and keen that any company growth would not affect the quality of medical services, which for me back then was a bit frustrating because I wanted to go further and believed I could do it without affecting quality. Now in hindsight, I can fully understand why he felt it was such a tough challenge, and we are glad to continue to maintain the quality by standardizing and accrediting our facilities.

After my father passed (may he rest in peace), we had to take charge of the company, and we continued to roll his model. Today we have 15 branches, each equipped with the top machines. We’ve hired the best doctors in Egypt and across the Middle East. I then wanted to commemorate his passion for quality via our affiliation with London’s Imperial College, which continuously ranks among the top 10 globally. They conducted a full audit on our labs and our operations from a quality perspective, and now we’re their partner academic institution, and we cross-share experience and expertise and so on. I felt this was a way to institutionalize the quality of our healthcare services.


So how did we get from Nile Scan & Labs Company to Elevate Private Equity? What was the rationale behind the $380 million fund with Misr Capital? Can we talk about ownership structure for this as well?

We’ve had investors knocking on our doors since 2009, including private equity firms, investment banks, and so on. My issue was each time they would speak to us back then, it felt like they wanted to divert us from our vision for healthcare services, wanting us to trim our dreams and repackage our business into something more “bankable,” more focused, etc. I believed we could do both, guaranteeing returns for investors while also continuing to hold on to our vision.

I was able to convince the company shareholders to stay aboard despite all the offers we had received after my father’s passing, and I am glad to say we have been able to generate returns of 40% Y-o-Y over the last 10 years with a CAGR of 36% over the same period, despite the various political and economic events that have occurred since then. We’ve also built partnerships with international MedTech companies such as GE, Philips, Siemens, and Medtronic, which really differentiated us and allowed us to enjoy agreements with them that set us apart from any of our competition.

While all of this was happening, I started pitching my idea, that I wanted to create a nationally led African healthcare fund or holding company. At first, this had very little traction, but with year after year of solid results in our books, the interest started to grow. Then, of course, in the wake of the COVID-19 pandemic, the whole concept gained traction dramatically.

I ended up having a conversation with Banque Misr Vice Chairman Akef El Maghraby, who heard our vision and saw our historical financials. He not only believed in our vision, but he also saw that we have a team that would be able to execute and deliver on our promise. We started researching, structuring, and modeling what has ultimately become our structure today. Akef delegated this project to Misr Capital, the investment banking arm of Banque Misr, led by Khalil El Bawab and his very capable team, and they followed through and stayed very loyal to our concept that we built together.

In April 2021, Elevate Private Equity (representing Nile Scan & Labs Company’s strategic management for the last 15 years) and Misr Capital launched an investment management vehicle called Elevate HC. This company is the general partner (GP) for the $380 million Elevate Healthcare Fund, which in turn has incorporated an Egyptian holding company called Nile Misr Medical Holding as well as an African holding company.

I believe there is a gap between true healthcare operations/assets and the investment community. I always say that healthcare is like an iceberg, with 90% of the industry not really known to most investors. My goal is to try to translate healthcare operations in Egypt, which is a massive industry and certainly one of the best private health care systems in the region, into something that is banked, into something that is a sustainable, into something that is more scalable, and so on.

We are doing this across seven areas of healthcare, namely diagnostics, hospitals, pharmaceuticals, medical insurance, medical education, digital medical services, and biomedical engineering. We’ve also established regional command centers to represent different corners of Africa, so we’re in Cairo, Kenya, Côte d’Ivoire, and Ghana, each set to operate or at least audit operations in the region from a medical perspective, management perspective, and investment perspective.


Are you involved at all with Egypt’s new Universal Healthcare Insurance (UHI) system?

First, let me tell you that NileScan and Labs has always been one of the top providers of diagnostic services for the Ministry of Health (MOH), the General Authority for Healthcare (GAH), and for some of the presidential health campaigns.

Regarding the new law, you cannot be serious about healthcare in Egypt without following the new public insurance law in the country. We’re following very closely what happened in Port Said, and we think the government’s efforts have been very impressive. We are now trying to assess the experience they had there to see how we can be more engaged when it comes to the next steps of the deployment, which is supposed to be in Luxor and Ismaileya. I think the government went all in, and they did a fantastic job in Port Said, which did not really leave much room for us to take be part during the first round, but there should be more room for us to work more closely with them in bridging the gap of healthcare service in larger governorates.

We’re currently in the process of obtaining accreditation from the General Authority for Healthcare Accreditation and Regulation (GAHAR) that the UHI will make mandatory at some point. We’re making sure that all our current and future facilities are compliant with these regulations ahead of time that way we can partake in the government’s efforts.


Can we talk about Egypt’s healthcare services sector? Can you shed some light on Egypt’s healthcare market in terms of beds vs population, labs vs population, and insurance penetration? What gaps do you see in the healthcare market?

For hospitals, the WHO recommends 2.6 beds/1,000 capita. What we have in Egypt is around 1.6 beds/1,000 capita. So we have 1 bed/1,000 capita missing. When you look at our population of around 100 million people, that is a significant shortage, meaning we are extremely underserved when it comes to hospital beds. But conversely, we’re not seeing hospitals at capacity, right? Even during the peak of COVID-19, we haven’t really seen any of our hospital capacity being stretched to the limit.

What we’ve realized about Africa is the space between 1.5 beds to 2.5 beds is more complex than the space before that. If you look at Ghana, for example, they have 0.8 beds/1,000 capita. They are in need for basic hospital capacity right now. When you’ look at Egypt at 1.5 beds, you will see that not all hospitals are doing great, which means that the kind of demand is different. You need a more technical take on hospitals, you need more specialized take on them. You’re not just building any hospital beds. We need more oncology specialized beds, more neurosurgery specialized beds, and subspecialized cardiology beds. So our needs are more specific than just general hospital beds, and this is the situation for Kenya, as well, because their average is near ours at 1.4 beds/1,000 capita.

At around this average, the kind of demand to fill the remaining gap is a more technical gap that really needs a deeper look at the healthcare dynamics in each of those countries. Below that number, you simply must build capacity.

In Egypt, I believe there is a need to consolidate some of the healthcare operations because that actually standardizes and raises quality, and it creates more significant competition. In my opinion, the competition is more intense when there are some five to ten bigger players than when is there are 100 smaller players because if the competition becomes too fragmented, then each player can do whatever they want in terms of standards and pricing. If there are a fewer number of bigger players, the competition drives higher quality and lower pricing.

As for diagnostics, I think the same goes for scans and labs. The demand from here becomes more technical and more sophisticated. While we might have enough MRIs to do shoulder imaging or spine imaging, for example, we do not have the capacity or the skills for extremely more technical kinds of investigations that have to do with neural, cardiac, or oncology imaging. So there remains potential in this direction. That said, this gap is much smaller in the more conventional areas of diagnosis, imaging, and labs. There’s a lot of competition when it comes to labs (in vitro diagnostics). As for higher quality, higher reproducibility, and higher sophistication of labs, we still do believe that there is a big gap in in this department.

As for private medical insurance, we do not feel that the current offerings are diverse enough. We still have not been able to penetrate through public insurance companies in Egypt more than 3%–4% of the population, which is by far below the international averages. This means that there are some barriers, some of them are culture, some of them are awareness, some of them are financial. We need to tackle this problem from all perspective because in no serious healthcare system in the world is the payer is the patient.


There are a few insurance-based startups working on InsurTech solutions. Is that something you are looking into?

Absolutely, we are in fact dedicating a part of our fundraising to seed a VC to invest in digital healthcare. There is a lot of very impressive work being done in digitizing healthcare services, insurance and digitizing pharma, pharma distribution, retail pharma. We plan to have our regional command centers build capacity to operate and to monitor from a distance, following up on all the digital startups that are there. We’re very interested to be at the frontlines of anything within the tech industry that has to do with any of our seven verticals.

We have funds focused on healthcare and other funds focused on education. Do you see room for collaboration on healthcare education?

Building specialized medical schools and centers for post graduate studies, something I think is sorely lacking in countries such as Egypt, is certainly on our radar, and it is in fact too intensive and too heavy to sustain by any single investment firm. So, the idea to collaborate between a medical healthcare service fund and an education fund is, I think, a great way to build strong, really robust medical schools, and schools in general. This is something that we are very open to.

What is your investment strategy, M&A transactions or initiating new investments?

So typically, a fund has to focus on M&As as it looks at existing companies that require cash and management consultancy to grow and achieve better efficiency, or better governance, or better sustainability, etc. M&A is really the heart and core of what we’re trying to do.


That said, there have been discussions with our investors about the possibility of investing in greenfield, and we’re glad to say that yes, we’re interested in greenfield and brownfield investments, but only if they are about to get operational. So anything that is around a year from operations is certainly something that we’re happy to look at. Anything further away from operations, then it’s likely not yet mature enough for us.

The reason is that there are many healthcare gaps in Africa in general and in Egypt specifically, and sometimes the available M&A opportunities are not even enough to fill in these gaps. We are happy to do something from scratch if it’s going to become operational soon, but really the goal is to get up and running, to invest in quality healthcare solutions that will deliver, so whatever will get us there faster.

That said, we are also working very closely with the Suez Canal Economic Zone (SCZone) and whenever we get an opportunity to localize the production of any important healthcare equipment or consumable, we try to localize it within that zone using all the benefits that they can get, and there are many investment pipelines in that direction.

We remain quite inclusive regarding partnerships, because I think that this is the way you build something that is truly international, autonomous, and robust.

Back in May, the local press reported you were looking at 6 potential acquisitions. What’s the status on this?

We are in fact looking at several potential acquisitions and will release an announcement if anything looks concrete following the necessary regulatory approval.

The press also said you had IPO plans. Can you elaborate on this?

We do believe in IPOing as a means to provide our investors with liquidity over their investment into shares. If our verticals reach a level of maturity and size that is interesting for the market, and if the market conditions are right, then we’ll look to list that specific vertical, or maybe the overall holding company in its totality. So I am in fact a big fan of listing as a way to provide liquidity for investors that have put their trust in us and that are looking to cash out some of their principal or returns that they have realized, but the market conditions have to be right.





1 Comment

  • Sewu-Steve Tawia
    Posted May 17, 2023 at 11:10 am

    Great initiatives, especially the intention to put capital in a VC fund. I am the General Partner of Jaza Rift Ventures, this is exactly our mission to provide better healthcare, that is affordable, accessible and of quality to Africa though medtech, biotech and digital health solutions.

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