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Abu Dhabi, UAEFriday 21 September 2018

Exclusive: NMC Health targets US and Africa in next wave of acquisitions

Company expects to make greenfield investments in Saudi Arabia, too

London-listed NMC Health is eyeing the US and Africa as its next target markets after sealing its first UK acquisition, its chief executive Prasanth Manghat said. Lee Hoagland/The National 
London-listed NMC Health is eyeing the US and Africa as its next target markets after sealing its first UK acquisition, its chief executive Prasanth Manghat said. Lee Hoagland/The National 

NMC Health, which joined the FTSE 100 list of companies last September, is looking to the United States and Africa for future investments, after sealing its first acquisition in the UK this week, its chief executive said.

No deal talks are taking place at present, Prasanth Manghat told The National, but expansion in both markets is a target from 2019.

“The US is a very promising market and we hope it will be our next one to break into, although it’s too early to discuss specific opportunities,” said Mr Manghat .

Africa, meanwhile, “is the future”, he said. “We are making sure it is high on our list of [investment priorities].”

NMC Health, which is based in the UAE, made its first foray into the African continent this year with a greenfield expansion of an IVF clinic in Nairobi, Kenya. The clinic will be operated through NMC’s European fertility brand Clinica Eugin, in which it acquired an 86.4 per cent stake in February.

“Infertility represents a major reproductive health problem across Africa in general and in sub-Saharan Africa in particular,” NMC said on Monday in a business update to the London Stock Exchange, where its shares are traded.

“With the Kenyan facility expected to attract patients from adjoining East African markets of Tanzania, Uganda and Rwanda, NMC views its state-of-the-art clinic as a launch pad for the attractive African market,” the company said.

NMC, which debuted on the LSE in 2012, is up nearly 50 per cent since it was added to the FTSE 100. It has a market capitalisation of £8.56 billion (Dh40.3bn), higher than the value of Emaar Properties, Dubai's biggest listed property developer with a market cap of Dh36.15bn.

NMC announced on Monday its entry into the UK , with the acquisition of 100 per cent of Aspen Healthcare from Tenet Healthcare Corporation in the US for £10 million. Under the deal, which is yet to complete, the healthcare provider will acquire Aspen’s network of nine facilities in the UK, including four hospitals, three of which are in Greater London, one in Edinburgh and clinics elsewhere in the UK.

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Exclusive: NMC Health eyes profit increase in 2018, fuelled by $2bn warchest

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NMC posted on Monday a 22 per cent rise in adjusted net profit to $141.4m in the first half of 2018, driven mainly by its string of recent acquisitions - including Clinica Eugin, the UAE’s CosmeSurge, and others - and strong overall performance. The company has a $2bn warchest to spend in the coming years and plans to continue the investment spree it begun in 2017.

Saudi Arabia is another target market, and NMC is putting together a five-year investment plan comprising a mix of acquisitions of up-and-running facilities and greenfield sites for development, Mr Manghat said.

In July, the company signed an agreement for a joint venture with Saudi Arabia’s Hassana Investment Company, a unit of General Organisation for Social Insurance pension fund, to provide 1,489 hospital beds in Riyadh. The majority of future acquisitions in the kingdom will be conducted through this JV, rather than NMC on its own.

The JV is yet to complete but is “progressing”, and the parties have identified a “lot of options” for investment, Mr Manghat said. These include greenfield sites to build fertility clinics, which are few and far between in the kingdom at present, meaning acquisition opportunities are scarce, he said.

In April, NMC launched a $450m bond offering and in March said it raised a $2bn loan for general corporate purposes and partly to refinance existing debt. There are no immediate plans for further structured financing but the group is likely to tap the markets again in future, the chief executive said.

“We will definitely look at more structured financing and are focused on it as a way of strengthening our balance sheet to drive future growth. But the markets are volatile and there is no reason to do this right now,” Mr Manghat said.

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