The BlackBee Healthcare Fund is one of the first domestic impact investment vehicles targeting healthcare to be sponsored by an Irish financial institution, providing investors with both a financial return and a measurable social impact.
The Fund is a 7 year, closed-ended Qualifying Investor Fund which will invest primarily in residential care facilities in the Irish long-term care sector, taking advantage of consolidation opportunities arising from a fragmented industry at present.
Public sector resources are unable to match the increasing needs of Ireland’s aging population, and private capital is emerging as the necessary solution to address a range of pressing healthcare challenges in Ireland. The Fund is seeking capital commitments from qualified investors as part of a total equity investment of €120 million.
An operating company has been established by BlackBee for the purpose of managing healthcare assets. The vertical integration of the operating company within the investment structure ensures an alignment of interests, transparency for investors and a means of attaining the company’s goal of achieving operational excellence in its delivery of patient care.
Experienced and proven team with expertise in social impact investing and structuring investment solutions on infrastructure assets, including assets in the healthcare sector.
The Fund will seek to achieve its investment objective through core strategies of acquisition, development and operational excellence, with c. 1,600 residential care beds under management by 2026. A target Internal Rate of Return (IRR) of 11% is envisaged over an investment horizon of 7 years, with maximum leverage of 65%.
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, 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 as illustrated and discussed more in The Supply Deficit section.
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.