UAE's largest healthcare provider is on an acquisition spree in the kingdom
NMC Healthcare snaps up two Saudi hospitals for $40m
NMC Healthcare, the UAE's largest private healthcare provider, is expanding further into Saudi Arabia, the Arab world's largest economy, via two multi-speciality hospital acquisitions worth a combined US$40 million and two greenfield health facilities.
The London-listed healthcare provider, which entered the kingdom last year via the acquisition of a 70 per cent stake in As Salama Hospital in Al Khobar, will acquire a 60 per cent stake in a new hospital in the southern city of Najran, and fully acquire a second hospital in the northwestern city of Ha’il.
NMC also plans to build a multi-speciality facility in the eastern oil city of Al Khobar, and has received regulatory approvals for its proposed new long-term care facility, Chronic Care Specialty Medical Center, in the Red Sea port city of Jeddah.
“Chronic Care Specialty Medical Center, along with the acquisition of two existing facilities (both of which are profitable) and the planned greenfield project, are expected to positively impact NMC’s EBITDA from 2018 onwards,” the company said. “Both acquisitions, as well as the greenfield project in [Al] Khobar, will be funded through a combination of cash on the balance sheet and utilization of available debt facilities.”
NMC’s expansion in Saudi Arabia coincides with the government’s privatisation plans for the country’s healthcare sector, as it bids to reorganise its finances in the wake of lower oil revenues.
“As one of the first foreign entrants into the KSA healthcare sector, we have learned a great deal over the past year and intend to use this knowledge to better navigate the Saudi regulatory landscape moving forward,” said Prasanth Manghat, NMC's chief executive.
“With a total licensed capacity now at about 700 beds, we see the Kingdom as an important part of NMC’s growth strategy and will continue to identify areas in which we can fill gaps in the country’s healthcare offerings.”
Mr Manghat told the National in August the company was looking at organic expansion together with possible acquisitions in the kingdom that could be funded via the NMC’s cash pile – currently about $500m - or within the company’s existing borrowing limits, or via other financing means including selling new shares to investors.
The kingdom’s healthcare industry is forecast by Aon Hewitt to grow at a compound annual growth rate of 12.3 per cent up to 2020, spurred by a rapidly growing population, and led by large projects including the King Abdullah Medical City in Mecca and the Clemenceau Medical Center in Riyadh.
The Saudi government is looking to the private sector to provide much of the kingdom’s future healthcare needs, as part of a widespread privatisation programme launched last year in a bid to overhaul the country’s finances.
NMC posted a 39 per cent rise in first-half profits in August, boosted by income from its new Saudi operations as well as Al Zahra Hospital in Sharjah, which it acquired in December.