A newly established joint venture between NMC Health and Hassana Investment Company, a unit of Saudi Arabia's General Organisation for Social Insurance (Gosi), bought additional shares in National Medical Care (Care) for 250 million riyals, as it seeks to grow its investments in the kingdom.
Agreements signed between the UAE's NMC Health and Hassana in March to form the NMC Healthcare Saudi Arabia Company jointly – called NMC KSA – was finalised on Sunday. A preliminary agreement signed in October included plans to invest up to 6 billion riyals (Dh6.05bn) in healthcare facilities in the kingdom over the next five years.
The joint venture is formed by NMC Health’s contribution of its five assets in Saudi Arabia, and an additional 250m riyals of cash, together with Gosi and Hassana’s contribution of their 38.88 per cent stake in the Tadawul-listed Care at a price of 54 riyals per share.
Under the joint arrangement, NMC owns a 53 per cent stake in Care and Gosi owns a 47 per cent stake through a wholly owned subsidiary, in the overall NMC KSA.
NMC Saudi Arabia will manage operations for the joint venture.
NMC KSA venture owns 49.2 per cent in Care, the joint company said. The purchase was funded through the additional cash injection of 250m riyals by FTSE 100-listed NMC Health, into NMC KSA.
Under the venture, NMC Health and Hassana aim to acquire and develop facilities with a capacity of up to 3,000 beds and employ a staff of 10,000, the Saudi government's media office said in October.
Saudi Arabia, the Arabian Gulf's biggest healthcare market, is encouraging private sector involvement in the industry, to help meet rising demand for medical services and insurance coverage from an expanding population, and contain treatment costs, according to a report last March by 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.