NMC Healthcare, the largest private healthcare provider in the UAE, is exploring expansion possibilities in Saudi Arabia, including further acquisitions, to tap demand for speciality services such as maternity care, fertility treatment and long-term health care.
The move coincides with the Saudi government’s privatisation plans for the country’s healthcare sector, as it bids to reorganise its finances in the wake of lower oil revenues.
NMC chief executive Prasanth Manghat told The National that the company was looking at organic expansion together with possible acquisitions in the kingdom, 12 months after it first announced its entry into the Middle East’s largest economy.
“If you look at the healthcare industry, the main question is how strong is the consumer base. How strong is the consumer’s spending power?” said Mr Manghat.
The Abu Dhabi-based company entered Saudi Arabia last August, buying a 70 per cent stake in As Salama Hospital in Al Khobar for $28m, and invested $4m for a 67.5 per cent share in another long-term care facility in Jeddah.
“Saudi Arabia definitely ticks the box, with a 30 million population, the majority of which are Saudi Arabians. And there is a supply/demand gap in areas in the market and we are in a position because of our experience to supply that demand. We believe we are the right fit.”
Mr Manghat said that NMC is planning a new 220-bed facility in Jeddah, as well as possible acquisitions in areas including intensive care unit management, cancer and diabetes treatment and general hospitals, but admitted there were few candidate assets currently up for sale.
Acquisitions could be funded via the NMC’s cash pile – currently about US$500 million – or within the company’s existing borrowing limits, or via other financing means including selling new shares to investors, Mr Manghat said.
He declined to say how much the company was willing to spend in Saudi Arabia.
“We are currently working on a number of things,” he said.
“There are a number of things in the pipeline and at the right time we will announce it.”
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The kingdom’s healthcare industry is forecast by Aon Hewitt to grow at a compound annual growth rate of 12.3 per cent up to 2020, spurred by a rapidly growing population, and led by large projects including the King Abdullah Medical City in Mecca and the Clemenceau Medical Center in Riyadh.
The Saudi government is looking to the private sector to provide much of the kingdom’s future healthcare needs, as part of a widespread privatisation programme launched last year in a bid to overhaul the country’s finances in the wake of lower oil prices.
Mr Manghat said NMC was also pursuing further expansion opportunities in Kuwait and Oman.
NMC last week announced a 39 per cent rise in first-half profits, boosted by income from its new Saudi operations as well as Al Zahra Hospital in Sharjah, which it acquired in December, the latest in a series of domestic acquisitions.
The company also announced an agreement to operate and manage facilities owned by Emirates Healthcare, which included CosmeSurge, Emirates Hospitals and Clinics, and Emirates Rehab and Homecare Services.
NMC’s shares, listed on the London Stock Exchange, closed up 0.1 per cent at an all-time high of 2,666.16p on Friday.
