Healthcare Bond III

The Irish residential care sector – an attractive investment opportunity.

“This is the coming together of Capital and Care under a single strategy to deliver the optimal solution for residential care and investors.”

David O’Shea, Founder and CEO
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Investment Overview

The BlackBee Healthcare Bond III provides secured shares in the BlackBee Healthcare Fund, one of the first domestic impact investment vehicles targeting healthcare, providing investors with both a financial return and a measurable social impact.

The Bond is a five-year investment term that will give investors the option of receiving a fixed 4.5% coupon paid annually for the term of the bond or 22.5% paid at maturity. The Bond provides a 0.5% Trail Fee per annum.

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Investment Profile

The Investment: BlackBee Healthcare Bond III

Underlying Assets: Residential Care Facilities

Investment Term: 5 year term

Liquidity: None

Issuer: City Quarter Capital II Plc

Investment Arranger: BlackBee Investments Ltd.

Security Type: Secured by shares issued in the BlackBee Healthcare Fund

Target Bond Notional: €5,000,000

Target Return: a) Income Option: 4.5% Annual Coupon or; b) Growth Option: 22.5% paid at Maturity

Minimum Investment: €10,000

Distribution Fee: 3% (plus 0.5% Trail Fee p.a.)

Closing Date: 30 June 2020

Start Date: 1 July 2020

Maturity Date: 1 July 2025

Expected Tax Treatment: Capital Gains Tax or Income Tax where applicable

Available To: Private, Pension, Corporate, ARFs, AMRFs, Charities & Trusts.

Investment Opportunity

A significant amount of the current stock of private care beds available in Ireland (c. 70%) are under family ownership. Of the centres under family ownership, a significant number of owners are approaching retirement age where assistance is required with succession planning. 

 

Benefits arise from the consolidation of such facilities under a single and competent operating company such as Aperee. 

The BlackBee Healthcare Fund provides an opportunity to deliver a significant social impact, by enabling investors to align their environmental, social and governance (“ESG”) beliefs and values into their investment portfolio.

The BlackBee Healthcare Fund provides a real asset investment opportunity within the alternatives investment sector. Healthcare infrastructure, as a subsector of real assets, offers a tangible investment opportunity for investors with a long-term investment horizon in a sector which is more sheltered from macroeconomic variables.

The Irish healthcare sector is a highly regulated environment, which benefits from centralised oversight and frameworks at a national level in contrast to models operated in other countries.

 

Residential centres are subject to independent oversight and registration by the Health Information and Quality Authority (“HIQA”), the independent regulator of the Irish residential care sector.

 

The Irish Nursing Home Support Scheme (“NHSS”), commonly referred to as the “Fair Deal” scheme, is the centralised framework operated by the National Treatment Purchase Fund (“NTPF”) on behalf of the Irish government. All residential centres agree the maximum weekly fee with the NTPF for residents approved under the scheme, generally for periods of one to three years.

BlackBee has established a new operating company, Aperee,to operate and manage healthcare assets. The Fund will primarily invest in Aperee, and will be the majority controlling shareholder. This ensures a robust governance framework is in place and interests are aligned between investors and clients. In addition, the framework facilitates direct oversight over the high standards of care and quality expected at each healthcare facility.

The Department of Health and the Central Statistics Office predicted in 2016 that the number of people in Ireland over the age of 65 will double between 2016 and 2040 as illustrated in Fig. 1.

 

People in this age range require a high level of medical care, necessitating a large expansion in resources in both the public and private sectors, particularly around the provision of additional residential care beds.

Currently there are c. 31,000 residential care beds in Ireland. This will need to increase to 59,000 by 2040 to facilitate a growing population that is living longer as illustrated in Fig. 2. Aperee intends to tackle this deficit both through organic growth opportunities within its acquired assets, as well as taking on new development opportunities.

Warning: The value of your investment may go down as well as up. You may get back less than you invest.

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