NMC Healthcare is going back to basics after its withdrawal from the US$2.2 billion bidding war for Al Noor Hospitals, its rival London-listed medical group.
NMC said this week that it would not bid for Al Noor, citing doubts about the financial return and risks to shareholder value from a takeover. But NMC has reaffirmed its commitment to expanding capacity in the UAE and other healthcare markets while continuing to be “highly selective and disciplined in its investment process” in a group strategy update.
“Over the past year we continued to execute our updated strategy in a highly dedicated and methodical manner, with full focus on meeting our strategic objectives and delivering sustainable long-term growth, strategic and competitive advantages and shareholder returns,” said Prasanth Manghat, NMC’s deputy chief executive. “We look to the future and continue to see very favourable healthcare market dynamics and substantial growth opportunities for NMC Health in the UAE and the wider region.”
The strategy update is a sign that NMC wants to put the abortive tilt at Al Noor behind it and get back to growing the number of hospital beds, enhancing medical specialisms and increasing its network of clinics across the UAE.
Since NMC floated its shares on the London Stock Exchange in 2012, it has used the increased access to capital to fund an expansion programme involving four major acquisitions in the UAE and in Europe.
This year it opened its largest hospital, the 250-bed “super speciality” NMC Royal Hospital in Abu Dhabi. The company said it would have 885 beds licensed in the UAE, as well as a network of medical centres and day surgeries, by the end of the year.
It will also have further developed its expertise in maternity and fertility treatment, long-term care and home care, operations and management, and product management.
NMC’s growth spurt since its public listing has been funded by $825 million of new financing facilities, including $475m earmarked for expenditure on acquisitions.
Despite these increased financial resources, Al Noor would have been a very big outlay for NMC. It is believed that some shareholders baulked at the higher borrowing it would involve, and the possibly dilutive effects of a cash-raising rights issue. NMC is dominated by “core” shareholders who have more than 60 per cent of the shares.
Matthew Menezes, an analyst at Citibank’s South Africa office, said an all-cash offer by NMC would be challenging given that a significant rights issue would probably be required.
Although they dipped 0.39 per cent yesterday to £7.64 on the London Stock Exchange, NMC shares have risen since they pulled out of the Al Noor bid.
Al Noor slipped slightly to £11.58, roughly the value of the offer it has agreed with Mediclinic of South Africa.
UAE-based VPS Healthcare has said it will definitely be making a counter-offer for Al Noor.
Follow The National's Business section on Twitter