Aureos Capital, a leading private equity fund management company has launched an innovative new medical risk management programme covering HIV/AIDS, malaria and tuberculosis.
The US$ 1 million pilot programme, which initially involves up to 15 Aureos investee companies in East Africa, is being funded by Norfund, the Norwegian development finance institution.
Announcing the initiative, Davinder Sikand, Aureos' Regional Manager Partner in Africa said: “We are doing this for business as well as social reasons. If it succeeds, and we are confident that it will, the companies will see real commercial benefits in the form of healthcare savings coming through to their bottom line. Lowering the turnover of skilled staff also has an obvious impact on productivity.”
“It will also have a much wider positive impact on the communities in which they operate and reduce the ravages of these dreadful diseases.”
It is believed to be the first time a private equity company has launched such a programme, which will benefit partner companies, employees and their families as well as communities and consumers.
The Aureos programme is based on research undertaken on their behalf amongst 21 Aureos investee companies in East Africa and amongst leading public health authorities. This research was also funded by Norfund.
Company health care costs related to HIV/AIDS, Malaria and TB can be very significant. For example, a 2006 study conducted in Uganda and sponsored by USAID, estimated the financial loss to a company of an AIDS infected employee in the last year of his or her life is US$3,750, which is nearly three times normal employment costs, including wages.
Another study in Kenya, conducted by the World Bank, estimated that the AIDS impact in 2007 on 16 large firms would be between 3%-8% of total labour costs and 4% of profit.
“These numbers imply that within Aureos East African investee companies there may be significant increased costs due to the rising cost of health insurance, sick leave and funeral benefits,” says Charles Gore, who is managing the programme for Aureos.
“Applying the Uganda data, total potential financial losses to Aureos companies would be approximately US$3 million for a projected 800 HIV positive employees.”
The Aureos scheme, which includes education, voluntary testing, counselling, ARV drug treatment and nutritional supplements, will cost $US36 per employee over two years and will cover the employee and its family.
The cost of US$36, which is believed to be only a fraction of the normal cost of such programmes, will be shared between the company and the sponsorship programme.
The low entry costs and savings generated should help create the first sustainable HIV/AIDS program in Africa for SMEs.
Gore said; “We estimate the healthcare costs could go down by as much as 60% once this programme is completed, so it should prove a valuable and far-sighted commercial investment for the companies as well as demonstrating their commitment to their local communities and enhancing their corporate reputations.”
Aureos Capital Ltd is a unique private equity fund management company, domiciled in Mauritius, which specialises in providing expansion and buy-out capital to unlisted mid-cap businesses across Asia, Africa and Latin America.
It was formed in July 2001 to assume management of 14 funds originally sponsored by CDC Group plc (the legacy portfolio) and to raise and manage a new generation of private equity funds under the Aureos brand, focusing on expansion and buy-out opportunities.
Since inception, Aureos has achieved 120 exits and as a result today's legacy portfolio comprises only 20 investments. The legacy portfolio consisted of a large number of early stage venture investments in frontier markets.
Over the same period, since 2001, Aureos has more than trebled its funds under management and has raised and/or managed over US$700 million and extended its geographical footprint to over 50 emerging markets.
Apart from Aureos employees, Aureos shareholders include CDC Group plc, Norfund and FMO which are, respectively, the British, Norwegian and Dutch development finance institutions.
Investors in Aureos funds include institutional investors, foundations and trusts, family groups, high net worth individuals, development finance institutions and multilateral development banks.