Burjeel IPO: UAE healthcare provider to sell 11% stake and list on ADX

Group consists of 61 assets, including hospitals and medical centres, across the UAE and Oman with its shares expected to start trading on the Abu Dhabi Securities Exchange on October 10

Dr Shamsheer Vayalil, Chairman and Managing Director of VPS Healthcare, launching Burjeel Holdings to consolidate the organisation's healthcare offerings. Photo: PR Newswire

Abu Dhabi healthcare provider Burjeel Holdings will sell 11 per cent in the company in an initial public offering, becoming the first privately owned firm to go public in the UAE this year.

The company plans to sell 550.7 million shares, it said in a statement on Monday. The offering includes 350.3 million shares sold by VPS Healthcare Holdings, which owns 79.8 per cent of Burjeel.

Of the offered shares, 10 per cent are to be allocated under the first tranche and 90 per cent under the second tranche.

The subscription period for institutional and retail investors will open on September 30 and close on October 4. The company's shares will start trading on the Abu Dhabi Securities Exchange on October 10.

On September 19, Abu Dhabi’s International Holding Company, the UAE’s largest company by market value ($178 billion), bought a 15 per cent stake in Burjeel.

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.

“Our long-term vision focused on increasing access to quality healthcare and clinical excellence across the region has driven our growth over the past 15 years,” Dr Vayalil said.

“Today’s announcement builds on our partnership with IHC which will have a transformative impact for Burjeel Holdings through the addition of new capabilities, capital and access to new markets.

“As healthcare expenditure continues to increase across the region, Burjeel Holdings is strongly positioned to benefit through our focus on providing complex, specialised medicine for all socioeconomic groups, through a targeted, multi-brand strategy.”

Burjeel had revenue of nearly 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 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 is the lead manager on Burjeel's IPO, while First Abu Dhabi Bank is lead receiving bank and International Securities acting as financial advisor.

Unlike capital markets in the US and Europe that have descended into bearish territory, the UAE has experienced a flurry of IPOs, with various government owned companies listing.

ADX, the Arab world's second-largest stock market, recorded a surge in liquidity and foreign investment in 2021 on the back of new listings, anchoring it as one of the world’s best-performing equity gauges in 2021.

IPOs have propelled the market value of the ADX to Dh2.25 trillion ($614bn), as of the close of trading on Friday.

Listings on the Abu Dhabi market this year include Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis and Abu Dhabi Ports Group, the operator of industrial cities and free zones in the emirate.

Nine companies listed on bourse last year, including Adnoc Drilling, as well as Fertiglobe, the world’s largest seaborne exporter of urea and ammonia combined, Alpha Dhabi, the property and construction company owned by IHC and Yahsat, the satellite operator owned by Mubadala Investment Company.

Last year, Abu Dhabi also announced a Dh5bn IPO fund to help encourage and support private companies to list on the local stock market.

Investment in the UAE's healthcare sector has picked since the Covid-19 pandemic. Companies are consolidating their assets to gain scale and add additional services including diagnostics, testing and other support services to better serve patients and increase their market share.

Dubai-listed investment company Amanat Holdings acquired Cambridge Medical and Rehabilitation Centre for $232m in one of the region's biggest healthcare deals last year.

In January, Abu Dhabi holding company ADQ merged its healthcare subsidiaries with Alpha Dhabi’s Pure Health Medical Supplies to streamline their portfolios, creating the UAE’s largest healthcare provider.