Harbinger Capital & African Medical Investments

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Harbinger Capital and African Medical Investments ( AMI), LON: GB:AMEI

In December of last year, 2012, AMI made changes to the makeup of its board of directors. This was something we were calling for since November, 2009. Our contention at the time was that the board was comprised primarily of executives from the mining industry and this was a poor mix of experience for leadership in a hospital company. Of course the ownership of AMI at the time was mostly made up of mining executives.

Shortly thereafter the board made a few unusual decisions including the purchase of an airplane and fitting it out to be an “air ambulance.” Our position, November, 2010, was that an air ambulance, much like a street ambulance, would bring high risk, low payment patients to AMI hospitals.

In early 2011 we wrote in the PHM Emerging Markets Healthcare Monitor:

In our initial assessment, the trouble with AMI is its close ties to the extraction industry. Unless its sister companies pay the full fees involved in flying workers to the hospital, AND pay the exorbitant trauma fees that will follow, we are not positive with this arrangement.

We expect the extraction companies will drag out their payables.”

The mining executives are gone. The air ambulance is gone. Yet troubles remain.

AMI is still in legal challenges with their hospital in Harare, Zimbabwe. But aside from their legal disputes about that one hospital, Zimbabwe itself is hardly a stable investment market.

Group revenue increased dramatically in 2012. But it is the revenue from Southern African operations that is most curious: it increased three times from 2011, all with the loss of the Zimbabwe operation.

Harbinger Capital is the largest shareholder in AMI. AMI is “small potatoes” to Harbinger. So what gives?

The head of Harbinger Capital is Paul Falcone. The ex board members (mining executives) of AMI are Phil Edmonds and Andrew Groves. Those two are also on the board of Sable Mining, a company Harbinger Capital held a significant position till late 2010.

Harbinger Capital’s position in AMI is now over 70%.

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On March 7, 2013
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