News / MegaProject 802: EBRD, Canada’s EDC and OPIC of US finance Izmir hospital in Turkey

MegaProject 802: EBRD, Canada’s EDC and OPIC of US finance Izmir hospital in Turkey

🕔 October 25, 2016
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The European Bank for Reconstruction and Development (EBRD), Export Development Canada (EDC) and the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, are co-financing the development of a €769.6 million (US$837.3 million) high-tech hospital in Izmir, Turkey’s third largest city.

The Izmir Bayrakli hospital will be designed, built, equipped and managed by the private developer Izmir Bayrakli Hastane Yatirim Ve Saglik Hizmetleri A.S, a joint venture between global industrial company GE and Turkish corporations GAMA Holding A.S. and Türkerler Insaat.

The comprehensive long-term financing package which brought together six international financiers was signed the 20 November in Ankara in the presence of Turkish President Recep Tayyip Erdogan.

President Erdogan said:

“Progress in health care services will bring about the development of the health care industry in our country. With these investments, we aim to make our country one of the top five countries in the world for medical tourism.”

Faced with the need for large investments, the Turkish government is seeking to engage private sector resources and know-how to construct and manage infrastructure facilities more quickly and efficiently.

The new health complex will span several buildings and have a total of 2,060 beds, providing better hospital facilities for the city and the region. Under a 28-year concession, the buildings will be leased to Turkey’s Ministry of Health. The private developer will act as facilities manager, providing building maintenance and non-clinical services, while medical services will remain the remit of the Ministry of Health. The hospital is expected to become operational in 2019.

As part of the financing package, the EBRD has arranged a €298.6 million (US$324.8 million) syndicated loan under its A/B loan structure, with €85 million (US$92.5 million) for the Bank’s own account and €213.6 million (US$232.4 million) syndicated to UniCredit S.p.A., Industrial and Commercial Bank of China Ltd Dubai Branch and Intesa Sanpaolo S.p.A.

OPIC of the United States and EDC of Canada are providing parallel financing of US$250 million and €65 million (US$70.7 million), respectively. This is the first health care PPP project financing in Turkey to involve co-financing by these two institutions.

Jean-Patrick Marquet, Director for EBRD operations in Turkey, said:

“Arranging this comprehensive long-term financial package for a new Izmir hospital is part of the EBRD’s efforts to catalyse private sector involvement in critical infrastructure in Turkey which brings money and know-how, and ultimately benefits people's ‎lives across the country.”

The hospital in Izmir is the fourth EBRD-financed project under a government programme to build or expand hospitals across the country in collaboration with the private sector. The Bank has also been working closely with the Turkish Ministry of Health over the past four years to enable greater private sector involvement in the hospital sector.

Sven List, EDC Vice-President, Structured and Project Finance said:

“EDC is very pleased to have participated in arranging financing for this important PPP hospital project in Turkey while providing support to our global strategic client, GE.”

OPIC President and CEO Elizabeth L. Littlefield stated:

“OPIC is proud to provide financing that will contribute to the construction and management of new hospital campuses in Turkey. This Izmir transaction will significantly improve the well-being of Turkish residents by increasing their access to high-quality health care services.”

The GAMA Holding A.S., Türkerler Insaat and GE consortium is also developing the Kocaeli Hospital PPP in the Izmit District of Kocaeli Province. The EBRD’s board of directors has approved financing for this project.

Hakan Özman, Deputy Chairman and CEO of GAMA Holding A.S. commented:

“Today’s signing is a major milestone in our long-term commitment to the Kocaeli and Izmir Bayrakli projects. GE brings a strong track-record of health care PPPs around the world and our long-term participation as an equity investor and technology provider will be essential in realising the Ministry of Health’s vision on these projects. With critical funding and project partners now in place the consortium will look to accelerate the construction and delivery of these projects.”

Kazim Türker, CEO of Türkerler Insaat A.S. said:

“In support of the government’s Hedef 2023 health care development plan, the consortium is on a clear path to deliver its commitment to the Ministry of Health on the Kocaeli and Izmir Bayrakli projects. The commitment of our foreign partners underscores long-term confidence in Turkey’s PPP strategy and in Turkey’s development goals.”

John Flannery, President and CEO of GE Healthcare said:

“At GE Healthcare we believe that real health care transformation comes from a willingness to embrace innovation. To that end, the Izmir and Kocaeli Integrated Healthcare Campus Projects are among the largest and most complex PPP projects globally that GE Healthcare has invested in to date, and they demonstrate our commitment to developing new business models and risk-sharing to drive sustainable health care development.”

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