Target Information

Infracapital, the infrastructure equity investment arm of M&G Plc, has finalized the sale of its entire stake in Concessioni Investmenti Infrastrutturali ("C2i") to Holding di Investimento in Sanità ed Infrastrutture ("HISI"). C2i is a portfolio encompassing public-private partnership (PPP) assets located in Northern Italy, which deliver essential public services to Vimercate Hospital in North Milan and Empoli Hospital, situated west of Florence. Additionally, C2i supplies energy to the Careggi University Hospital, located north of Florence.

During Infracapital's tenure, which began with the acquisition in 2016, C2i accomplished a crucial milestone by completing the construction and commissioning of Empoli Hospital on schedule and within budget. The portfolio, which includes three hospitals with a combined total of 2,816 beds, played a vital role during the Covid-19 pandemic, particularly when the Italian healthcare system faced unprecedented challenges, leading to a severe shortage of ICU beds.

Industry Overview in Italy

Italy's healthcare infrastructure is primarily supported by a mix of public and private investments, particularly in the PPP domain, which has gained traction as a viable solution for financing large-scale projects. The Italian government's commitment to enhancing the healthcare system has led to the formulation of policies aimed at improving infrastructure and accessibility, especially post-pandemic.

In recent years, the healthcare sector has witnessed a significant push towards modernization and efficiency. This is reflected in the growth of PPP projects that aim to deliver healthcare services more effectively while maintaining high standards. The involvement of private investors in this sector is increasingly recognized as crucial for overcoming finance-related challenges and improving service delivery.

The ongoing investment in medical facilities, technology advancements, and the need for sustainable healthcare solutions have driven the market's expansion. With the backdrop of an aging population and rising health demands, Italy's healthcare infrastructure sector is poised for continued growth.

Moreover, as the pandemic has highlighted the necessity for a resilient healthcare system, policymakers are looking towards innovative funding solutions, such as PPPs, to build more robust and flexible healthcare facilities. As a result, the sector presents various opportunities for stakeholders looking to invest in vital infrastructure in Italy.

Rationale Behind the Deal

The rationale behind Infracapital's decision to sell its stake in C2i involves strategic timing and a successful investment track record. Throughout its ownership, Infracapital's expertise facilitated the completion of critical infrastructure projects that adapted to the evolving needs of the healthcare sector amid the pandemic. Concluding this deal aligns with Infracapital's strategy of maximizing value for its investors, while transferring stewardship of these essential assets to a firm with a keen focus on healthcare infrastructure.

Moreover, the sale enables HISI to extend its footprint within the healthcare PPP sector in Italy, thereby ensuring continuity and further investment into the hospitals managed by C2i.

Investor Information

HISI, or Holding di Investimento in Sanità ed Infrastrutture, is a 100% subsidiary of Fondo Ania F2i, which focuses on investing in PPP/PFI infrastructure projects primarily within the healthcare sector. HISI aims to strengthen its portfolio by acquiring stakes in special purpose vehicles (SPVs), facilitating private companies to reduce capital exposure and manage assets efficiently.

Currently, HISI manages various hospital concessions, including those for non-medical services at several prominent hospitals across Italy. By ensuring stable investment in these projects, HISI is well-positioned to partner with public administrations and enhance healthcare service delivery in the country.

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From an investment perspective, this transaction stands out as a prudent decision for both parties involved. For Infracapital, the divestment reflects a successful exit strategy, capitalizing on the value created during its investment lifespan, which has included vital contributions to the healthcare system amidst a challenging operating environment.

On the other hand, HISI's acquisition of C2i embodies a strategic move to fortify its existing healthcare assets and expand its operational capacity. Given the vital role of healthcare in the aftermath of the pandemic, this investment aligns with broader market demands for supportive and efficient service delivery.

This deal could serve as a positive precedent for future investment flows into Italy's healthcare infrastructure, signalling growing confidence among investors regarding the viability of PPP projects. Such a trend can inspire greater participation from institutional investors, thereby enhancing service standards in Italy’s healthcare sector.

In conclusion, the carefully orchestrated transaction not only illustrates successful asset management but also underscores the significant growth potential within Italy's healthcare PPP market. As stakeholders continue to invest in this critical sector, future collaborations and developments are expected to flourish, ultimately resulting in better healthcare delivery for the Italian population.

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