NMC finalises terms of healthcare joint venture with Saudi Arabia’s GOSI
Deal signed in October includes investments of up to 6bn riyals in the kingdom
NMC Health finalised a joint venture agreement with Saudi Arabia’s General Organization for Social Insurance that includes up to 6 billion riyals of investments in the kingdom over a five-year period
NMC, a London-listed UAE healthcare provider, signed a preliminary agreement in October last year with Hassana Investment Company, the investment arm of GOSI, to set up a joint venture that will acquire and develop facilities with a capacity of up to 3,000 beds and employ up to 10,000 full-time and part-time employees.
“This partnership will allow NMC to significantly increase its pace of expansion in the Kingdom, while simultaneously bringing best practices to the country,” said Prasanth Manghat, the chief executive of NMC in a statement on Tuesday. “The attractive, but under-served Saudi healthcare market offers significant growth opportunities and the JV is uniquely placed to benefit from them."
Saudi Arabia, the Arabian Gulf’s biggest healthcare market, is encouraging private sector involvement in its healthcare industry to help meet rising demand for medical services due to an expanding population, increased treatment costs and rising insurance coverage, according to a report from Dubai investment bank Alpen Capital.
Spending in the kingdom’s healthcare sector is forecast to expand at a compound annual growth rate of 6.1 per cent to reach $59.5bn by 2022 from an estimated $44.3bn in 2017.
The JV includes NMC’s contribution of its five assets in the kingdom, an additional cash injection at closing of requirements, and GOSI's contribution of its 38.88 per cent stake in Tadawul-listed National Medical Care Company at a price of 54 riyals per share. NMC did not disclose the value of the money to be pumped into the JV or the timeline for the closing of the requirements.
“At the closing of the transaction, NMC will own a 52 per cent stake (through the combination of asset contribution and cash injection) and GOSI will own a 48 per cent stake (through a wholly-owned subsidiary vehicle) in the JV,” the statement said. “NMC will have operational control of the JV."
Updated: March 5, 2019 12:01 PM