A private healthcare investment company in the capital plans to raise millions of dirhams from private investors that would be used to build a network of hospitals and clinics in the UAE.
United Eastern Medical Service's private placement is expected to offer up to 49 per cent of the company to accredited investors willing to put up at least Dh25 million (US$6.8m) apiece. It aims to raise a total of Dh200m. ($54m)
"We are raising the capital to develop and create a referral network consisting of speciality centres, clinics and hospitals working together as one," said Mohammed Ali al Shorafa, the chief executive of United, which is based in Abu Dhabi.
National Bank of Abu Dhabi is also lending the company Dh380m to finance the project's development.
United's flagship project is Danat Al Emarat, a women's and children's hospital, which is expected to launch by December next year near the Musaffah Bridge. The hospital is designed to have a total capacity of 200 beds, 30 luxury suites, a spa, private classrooms and an auditorium. Parkway Health, based in Singapore, was chosen to develop the clinic and manage day-to-day operations.
In addition to Danat Al Emarat, there are plans to build 20 family boutique clinics on Abu Dhabi island that would alleviate much of the traffic and demand on existing hospitals, Mr al Shorafa said.
"The private healthcare sector has lagged behind its public counterparts, as government and quasi-government entities have brought [in] the best of breed from John Hopkins Hospital and Cleveland Clinic, but there is still a lack of customer service ," Mr al Shorafa said. "The private sector wants to develop also but faces challenges as upgrades and keeping up standards means that investments are long term and very capital intensive. We see it as a huge opportunity for us."
The healthcare industry in the UAE is estimated to be worth Dh2 billion annually, Mr al Shorafa said, and he expects it grow at an annual rate of 20 per cent.
Mr al Shorafa's family holds a 38 per cent stake of the healthcare firm through United Eastern Group. He said one of the goals of the private placement was to increase and diversify its shareholder base. "It is part and parcel of our growth plans," he said. Al Jaber Group holds a 52 per cent stake in the company and Darwish Bin Ahmed & Sons 10 per cent.
The company is looking for long-term strategic investors, such as private-equity firms and family offices, in addition to government and financial institutions.
"One of our exit strategies is to go public, which we forecast to happen in the next two to three years," Mr al Shorafa said. "It is a way of getting the money to be reinvested and is always a route of financing for us."
United's private placement comes on the heels of two other Abu Dhabi private hospitals selling stakes in their companies to private equity investors with the aim of going public.
Al Noor Hospital sold a Dh1bn equity stake to Ithmar Capital in June and said it planned to list on the Abu Dhabi Securities Exchange, although no date has been confirmed. Nmc Healthcare sold a 40 per cent stake worth $1bn to Centurion Investments in January intending to float the company on the Nasdaq Dubai exchange.
Initial public offerings of companies in the healthcare industry could add value for the local stock exchanges, said Nicholas Gilani, the co-head of investment banking at National Bank of Abu Dhabi. "New entrants from the healthcare industries would provide more depth and value to the local bourses," he said.