Burjeel IPO: UAE healthcare provider raises $300m from oversubscribed offering

Offering was more than 29 times oversubscribed, drawing strong demand from the UAE and region, with total gross demand at more than $8.7bn

A medic at Burjeel Hospital in central Abu Dhabi holds a dose of a vaccine developed by Chinese drug maker Sinopharm. Victor Besa / The National

Abu Dhabi healthcare provider Burjeel Holdings raised more than Dh1.1 billion ($300 million) from the sale of an 11 per cent stake sale in the company's initial public offering.

The IPO drew strong demand from investors in the UAE and the region, and was more than 29 times oversubscribed. Total gross demand was more than Dh32 billion ($8.7bn), the company said on Wednesday.

The company sold more than 550.7 million shares at the lower end of its offer share price of Dh2. Burjeel’s market capitalisation upon listing is expected to be about Dh10.4bn, making it one of the largest private healthcare companies on the Abu Dhabi Securities Exchange by market value.

Its shares will begin trading on October 10 under the symbol “BURJEEL”. VPS Healthcare Holdings will continue to own a 70 per cent stake in the company after the listing.

Burjeel Holdings, founded in 2007 by Dr Shamsheer Vayalil, has a network of about 61 assets, including hospitals and medical centres, as well as pharmacies and other allied services throughout the UAE and Oman.

The company plans to enter Saudi Arabia, with investments of up to $1bn planned in the Arab world’s largest economy through joint ventures and public-private partnerships.

“The strong demand for the IPO … reflects the high-quality investment opportunity provided by Burjeel Holdings, built around our clear clinical vision and our strong growth trajectory in the Mena region,” said Dr Vayalil.

“The offer price reflects our desire to prioritise a supportive aftermarket performance post-listing.”

On September 19, Abu Dhabi’s International Holding Company, the UAE’s largest company by market value, bought a 15 per cent stake in Burjeel.

Burjeel had revenue of about Dh3.4bn in the 2021 fiscal year, representing an 18 per cent compound annual growth rate from 2019 to 2021.

The company plans to pay cash dividends from 2023 onwards, on the expected basis of a payout ratio of 40 per cent to 70 per cent of net income, depending on the required investment for additional growth plans.

In the absence of attractive investment opportunities, it will distribute dividends at the upper end of the payout ratio range or potentially higher, it said.

The first interim dividend is expected to be paid in the second half of 2023 on the basis of net income for the first half of 2023.

Dubai Islamic Bank acted as the lead manager in the IPO while First Abu Dhabi Bank was lead receiving bank and International Securities acted as financial adviser.

BHM Capital Financial Services was listing adviser while JP Morgan acted as capital markets adviser to the company and selling shareholder.