NMC Health prepares $825 million for international expansion and refinance of debt

NMC Health is turning its attention to expansion abroad, with Saudi Arabia and other Arabian Gulf countries earmarked for potential deals.

NMC Health, founded by the Indian billionaire BR Shetty in 1973 as a small clinic and pharmacy in Abu Dhabi, has grown to become one of the biggest names in the UAE's healthcare sector. Ravindranath KShow more

NMC Health is raising a US$825 million war chest to help fund the international expansion of the Abu Dhabi-based hospital operator.

It comes as UAE-based healthcare groups gear up to spend billions of dollars on developing new hospitals, clinics and laboratories.

The London-listed NMC has secured commitments from banks for the facility, which includes a $475m chunk to fund acquisitions, with the remaining $350m to be spent on refinancing debt.

Founded by the Indian billionaire BR Shetty in 1973 as a small clinic and pharmacy in Abu Dhabi, it has grown to become one of the biggest names in the country’s healthcare sector.

“The company has a broad presence across the UAE, so it makes sense to look at adjacent markets as well,” said Charles Weston, the director of healthcare equity research at Numis Securities in London.

Since its 2012 London IPO, NMC has rapidly expanded its UAE presence, which includes the 100-bed Brightpoint Royal Women’s Hospital in Abu Dhabi, which opened in July last year, and a 60-bed hospital in Dubai Investment Park. It expects to open a new 250-bed hospital in Khalifa City in the first half of this year.

Now it is turning its attention to expansion abroad, with Saudi Arabia and other Arabian Gulf countries earmarked for potential deals.

It also aims to capture more medical tourists in its UAE hospital network.

“The new [loan] facility mirrors the company’s ongoing strategic initiatives of identifying value-added and accretive acquisition opportunities that will position NMC as one of the largest, most advanced and qualitative healthcare service providers in the region and beyond,” said Prasanth Manghat, the deputy chief executive at NMC.

The healthcare market in the region is growing because of mandatory health insurance, a rapidly expanding population and the prevalence of chronic illness such as diabetes and cardiovascular disease.

The market is expected to almost double to $69.4bn by 2018 from an estimated $39.4bn in 2013, according to Alpen Capital research.

Saudi Arabia is expected to remain the largest regional healthcare market, while Qatar and the UAE are predicted to be the fastest-growing ones. More than 11,000 new hospital beds are needed across the region over the next five years, creating attractive opportunities for groups such as NMC.

The need for beds has led to a scramble by local and international healthcare groups to develop more hospitals, clinics and diagnostic centres to keep pace with spiralling demand.

Other operators in the UAE are also gearing for expansion.

Aster DM Healthcare, which is finalising an IPO in India, is adding more clinics and pharmacies across the Middle East and India.

It already runs about 230 establishments, including hospitals, clinics and pharmacies, and is expected to have close to 300 by 2017.

Private equity groups are also keen to deploy funds, drawn by the attractive fundamentals of the industry.

In Saudi Arabia, the investment firm Alkhabeer Capital said yesterday that its healthcare private equity fund had acquired a majority stake in Eed Group, a Saudi integrated healthcare provider. The Sharia-compliant fund was launched in the fourth quarter of last year.

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