Al Noor Hospitals expects $1bn valuation after planned London listing

The biggest healthcare company in Abu Dhabi, which owns three hospitals and nine medical centres in the emirate, is seeking to sell a stake worth between $320 million and $390m in its initial public offering (IPO).

28 - 5 - 2013, Airport Road, Abu Dhabi

Al Noor Hospital Building in Airport Road. Fatima Al Marzooqi/ The National
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Al Noor Hospitals expects a valuation of more than US$1 billion after its planned listing on the London Stock Exchange, the company said as it published its prospectus yesterday.

The biggest healthcare company in Abu Dhabi, which owns three hospitals and nine medical centres in the emirate, is seeking to sell a stake worth between $320 million and $390m in its initial public offering (IPO).

With the price range set at between £5.25 to £7.25 per share (Dh29.98 to Dh41.40), the firm is expected to have a market capitalisation of between $950m and $1.26bn.

"The healthcare market is one of the fastest growing sectors in the UAE due to the rapidly increasing and ageing population, the rise in lifestyle-related medical conditions, healthcare service gaps and growth in the privately insured population," said Dr Kassem Alom, the chief executive of Al Noor Hospitals Group. "This, together with our clearly defined organic and acquisition growth strategy, positions us well to deliver long-term shareholder value."

The listing is intended to raise gross proceeds of $150m, with the company earmarking $50m for acquisitions of a speciality centre and a group of medical centres as it develops within Abu Dhabi and enters other emirates.

Deutsche Bank and Goldman Sachs are joint sponsors and coordinators, acting alongside HSBC as joint book runners. Rothschild is acting as financial adviser to the company.

Al Noor Hospitals is currently 50 per cent owned by Ithmar Capital, a private equity firm, with the remaining shares held by the healthcare company's two founders, Sheikh Mohammed bin Butti Al Hamed and Dr Alom.

During the last year, Al Noor Hospitals generated revenues of $324.4m, and the company's profits grew by 19 per cent compared with the previous year to $60.5m.

The $1.26bn maximum valuation sought compares to the $879.3m market capitalisation of NMC Health, the Abu Dhabi-based healthcare company that listed on the London Stock Exchange in April last year.

"At the lower end of the pricing, the premium being sought by Al Noor Hospitals does not look quite so pronounced," said Charles Weston, an analyst at Numis Securities in London who covers the stock.

NMC benefits from a greater share of income from distribution, which is expected to account for about a quarter of its earnings before interest, taxes, depreciation and amortisation this year, he said.

"Al Noor is a pure hospital operator," Mr Weston said. "You'd probably pay a slightly higher multiple [for NMC], all things being equal."

However, Al Noor Hospitals' concentration in Abu Dhabi also focuses its business on the most profitable end of the UAE healthcare market, Mr Weston added.

"Abu Dhabi is the most attractive because of mandatory healthcare insurance," he said. "In Dubai, it's expected that healthcare insurance will become mandatory this year… you would expect the healthcare market in Dubai to grow quite rapidly."

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