State-of-the- art hospital complex to be constructed in public-private partnership.
The European Bank for Reconstruction and Development (EBRD) is co-financing the development of a €318 million high-tech hospital in Konya, a city in Turkey’s central Anatolian region.
As part of a comprehensive long-term financial package, the EBRD has arranged a €147.5 million syndicated loan under its A/B loan structure, with €67.5 million for the Bank’s own account and €80 million syndicated to UniCredit Bank Austria AG and Siemens Financial Services. The Black Sea Trade and Development Bank and the Islamic Development Bank are providing parallel financing of €50 million and €67.5 million respectively. This is the first project finance transaction by the Islamic Development Bank in Turkey and the first healthcare PPP project it has ever financed.
The new hospital in Konya, the seventh most populous city in Turkey, will be designed, built, equipped and managed by the private developer ATM Sağlik Konya Yatırım ve İşletme A.Ş. The company is owned by YDA Inşaat Sanayi ve Ticaret A.Ş., the construction arm of the EBRD’s longstanding partner in Turkey, YDA Group.
The hospital complex will span several buildings with a total of 838 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.
Susan Goeransson, Acting Director for Municipal and Environmental Infrastructure, at the EBRD said: “The EBRD’s goal is to demonstrate new successful financing structures of public-private partnership (PPP) projects. We are pleased to see new lenders joining the scheme and our PPP model being replicated by commercial banks in other projects. We believe that this comprehensive joint effort will further improve quality of life in Turkey.”
Hüseyin Arslan, YDA Group Chairman, said: “This project is a great success with many first applications. It represents the first project finance where Islamic Development Bank has contributed. At the same time, this is the first hybrid project financed under both conventional financing and sharia-complaint Islamic financing under a dual-tranche structure. We’re proud to introduce different financing structures to Turkey, strengthen our strategic partnership with EBRD and attract new financiers to pave the way at a time when there are so many infrastructure projects ahead in Turkey.”
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 hospital in Konya is the third EBRD-financed project under a €12 billion government programme to build or expand about 60 hospitals across the country in collaboration with the private sector. To date, tenders for 21 hospitals worth €8 billion have been completed.
In addition to providing and mobilising finance, the EBRD has worked closely with the Turkish Ministry of Health over the past three 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.
The EBRD is a leading investor in Turkey and currently operates from offices in Istanbul, Ankara and Gaziantep. To date, it has invested over €7 billion in the country through 180 projects in infrastructure, energy, agribusiness, industry and finance. It has also mobilised about €16 billion for these ventures from other sources of financing.