The Tribune

• To offer minority stake to island’s retail investors

• $20m facility to open early 2022 with 90-100 direct jobs

• PwC hired to advise on offering; structure to be decided

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital is planning to offer at least a 40 percent collective ownership stake to Grand Bahamians in the $15m-$20m hospital it plans to open on that island by the 2022 second quarter.

Dennis Deveaux, the BISX-listed healthcare provider’s chief financial officer, told Tribune Business that Grand Bahama residents “should expect to start hearing” about how they can acquire an equity interest in the new hospital by October 2021.

Disclosing that the facility will create between 90-100 direct jobs “at full maturity”, he disclosed that construction work on the building identified for the Grand Bahama hospital will begin in the same month as details about the share offering are likely to be released.

Arguing that Grand Bahama’s healthcare needs mean “we don’t have the luxury of a two-three year build-out”, Mr Deveaux acknowledged that details regarding the offering of a large minority equity stake are still being worked out - including timing, share price and whether it will take the form of an initial public offering (IPO) or private placement.

Revealing that up to a 49 percent collective ownership interest could be offered, he explained that it would initially only be made available to Grand Bahama and “northern Bahamas” residents. If any shares remain, they would then be offered to retail investors (individuals) throughout The Bahamas and only opened up to institutions in a final third phase in a bid to achieve the broadest possible ownership.

“It’s no secret that we’re looking to put a full in-patient hospital in Grand Bahama,” Mr Deveaux told this newspaper. “That project has received quite a bit of support at the clinician level and a fairly mature client base. We envision some time in the first and second quarters of 2022 starting up a new hospital in Grand Bahama.

“The concept of the hospital is 12 beds on the ground from day one with the capacity to expand to 20, a full Intensive Care Unit (ICU) with five to seven ER (emergency room) critical bays with the capacity to expand. We’re building in the capacity to expand with evolved healthcare needs. We’re approaching Grand Bahama with scalability.

“We anticipate that at full maturity we could be looking at anywhere from 90-100 full-time jobs. Beyond direct employment impacts, we expect to engage local designers and architects, and for certain vendor services we expect to have local partners.”

Mr Deveaux said the emergency room bays could thus be rapidly expanded to ten. While there had been initial suggestions that Doctors Hospital will partner with Cleveland Clinic for its Grand Bahama expansion, he added that this had not been finalised and was “an open discussion point”.

The Doctors Hospital financial chief, who declined to say where the Grand Bahama facility will be located other than to confirm it involves taking over and retrofitting an existing building, said the company now planned to speak to the island’s doctors and find out what “gaps” exist in current healthcare delivery to it can seek to fill them.

“We have to find out what capacity exists. It’s what gaps exist,” he explained. “We think some gaps exist, but the details of that are going to come out in conversations with physicians on the ground.” Mr Deveaux pegged the total investment in Grand Bahama at between $15-$20m, which would mean a 40 percent share offering’s worth is equivalent to between $6m and $8m at total valuation.

Revealing that construction work will start this October, with the number of jobs likely to be “a little less” than the 90 full-time posts, he added: “The hospital will open in the first or second quarter of next year. We don’t have the luxury of a two-three year build-out. The need in Grand Bahama is right now. 

“Based on the building we have selected, we’d envision by the early part of October that we’re starting demolition at a minimum and finalising plans for new works.” Mr Deveaux said Doctors Hospital’s “very strong” financial position means it “can stand up” the Grand Bahama hospital without needing to draw on the $13.5m equity injection it received from new 17 percent shareholder, Fairfax Financial Holdings, earlier this year.

“Part of our strategy is to make part of the Grand Bahama hospital available to northern Bahamians through a share issue,” he revealed. “Forty percent, and possibly a little more, to Grand Bahamians and northern Bahamians. We haven’t figured out what the company holding structure would be, but in concept we want to make ownership available to Grand Bahamians first.

“If they are not able to meet the full subscription, we will make it available to other retail investors in The Bahamas and then institutional investors.” One possible way for Doctors Hospital to achieve its objectives is to place the Grand Bahama facility in a separate, subsidiary company and then offer shares in that entity.

Emphasising that nothing has been decided, Mr Deveaux revealed that Doctors Hospital is contracting the PricewaterhouseCoopers (PwC) accounting firm to act as financial adviser to the Grand Bahama hospital share offering, as well as “bring on one additional adviser; an investment broker who can sell securities in The Bahamas”.

He did not name that person or entity, but added: “Our 40 percent target right now might go to 49 percent in making that equity available. Folks should expect to start hearing about that in earnest in early October... We’ve not determined whether it will be a public or private placement.

“For a very long time there’s been under-delivery, under-capacity of healthcare in Grand Bahama. We look forward to engaging the local community and building a true Grand Bahama hospital run by Grand Bahamians with all the quality healthcare they have come to know and expect from Doctors Hospital. A true local hospital, whose project leaders are Grand Bahamians.”