The European Bank for Reconstruction and Development (EBRD) is co-financing the development of a €542 million high-tech hospital in the south-eastern Turkish city of Adana, as part of Ankara’s plan to significantly expand quality hospital facilities across the country under the public-private partnership (PPP) model.
The Adana hospital campus will be designed, built, equipped and managed by a private developer, ADN PPP Saglik Yatirim, set up by a consortium of Turkish and international firms. These include one of Turkey’s largest construction and infrastructure companies, Rönesans Holding, and the leading global infrastructure firm, Meridiam, investing through a private equity fund where the EBRD is a shareholder. Construction will be carried out by top international contractor Rönesans Construction, a subsidiary of Rönesans Holding.
The project is part of a €12 billion Turkish government programme to build or expand approximately 60 hospitals across the country in collaboration with the private sector. The programme is intended to improve Turkey’s availability of resources for delivering quality services in hospitals. Currently, the number of hospital beds per 1,000 people is only half the Organisation for Economic Co-operation and Development’s average.Faced with the need for large investments, the Turkish government is seeking to tap private sector resources and know-how to construct and manage infrastructure facilities more quickly and efficiently.
The new Adana hospital is one of the first hospital campuses to be built under the programme and the largest to be financed to date. The EBRD has played a key role in securing a €443 million long-term financing package for the project and is the largest lender. The Bank is extending a €225 million financing facility under its A/B loan structure, with €125 million at 18-year maturity for the EBRD’s own account and €100 million syndicated to commercial banks for 15 years. Financing partners include the International Finance Corporation, the French development agency Proparco and the German development bank DEG, which together are mobilising €120 million in parallel financing. The project has also attracted five international commercial banks under similar terms.
The high-tech campus will span several hospital buildings and will be able to accommodate 1,550 beds. Under a 28-year concession, the buildings will be leased to Turkey’s Ministry of Health. The private developer will act as facility manager, providing building maintenance and non-clinical services, while medical services will remain the remit of the Ministry of Health.
Jean-Patrick Marquet, EBRD Director for Municipal and Environmental Infrastructure, said: “The partnership between the public and the private sector will deliver better hospital facilities for a community of almost two million people living in Adana. The arrangement allows the Ministry of Health to focus on what it does best – providing healthcare – while working with private investors doing what they do best – raising finance, and designing, constructing and managing what will be a state-of-art hospital facility.” Michael Davey, EBRD Director for Turkey, added: “By supporting – both through investment and advice – Turkey’s vast programme of hospital-building under a PPP scheme, we want to promote the role of the private sector in developing and financing these essential infrastructure projects. The Bank aims to finance several other hospital PPP projects in the future and will continue backing the Ministry of Health with technical assistance and advice.”
The EBRD has worked closely with the Turkish Ministry of Health over the past two years to enable greater private sector involvement in the hospital sector. Improving the quality of essential infrastructure through private sector participation is one of the EBRD’s priorities in Turkey.
The Bank started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. To date, the EBRD has invested almost €4.5 billion in the country in more than 130 projects in infrastructure, energy, agribusiness, industry and finance. In just five years the EBRD’s portfolio in Turkey has become one of the largest among the countries where the Bank invests.