NMC acquires majority stakes in two healthcare operators for $207m

The company continues to deploy its $800m 'war chest' to expand in the Arabian Gulf and beyond

22/01/2018 15:50 AST

NMC Health acquired controlling stakes in two GCC-based healthcare operators for a combined investment of US$207 million as the firm continues to deploy its $800m "war chest" to expand its footprint in the Arabian Gulf region and beyond.

The London-listed healthcare provider purchased a 70 per cent stake in CosmeSurge, a UAE-based cosmetic surgery and aesthetic medicine healthcare company from Emirates Healthcare Group for $170m, the company said in a statement on Monday.

The implied enterprise value of the asset is approximately $250m and the transaction is expected to be "earnings and margin accretive" from first year of purchase.

NMC has also acquired an 80 per cent stake in Al Salam Medical Group, a Riyadh-based healthcare operator, with an initial investment consideration of $37m.

"These value accretive and earnings enhancing transactions fit well with our growth strategy," said Prasanth Manghat, chief executive of NMC Health. "We see substantial opportunities for revenue and cost synergies across both acquisitions, and the cosmetics business in particular has the potential to be further developed into an independent business vertical at a later stage."

Investment houses and healthcare operators in the GCC are increasing looking to expand their portfolios of investments as population in the region grows and the demand for healthcare services rise. The regional governments, which mainly rely on oil proceeds to maintain public services are also encouraging private sector to take control of government-run healthcare facilities.

NMC in December said it was looking to invest $800m in the region and beyond from 2018 as it banks on the growth from the privatisation of the healthcare sector in Saudi Arabia and the roll-out of mandatory health insurance in Dubai and Oman. The company's $800m "war chest" includes $500m from cash and funded facilities and $300m from the company's balance sheet. NMC may also consider issuing a bond to help fund any acquisitions, it said at the time.

The CosmeSurge transaction includes a chain of 17 operational clinics, in the UAE, Oman and Kuwait. The firm has a 10-bed hospital and two new clinics currently under construction in the UAE, which are scheduled for opening during the first half of this year, it said. The deal for the majority shareholding in Al Salam Medical is expected to be completed in the first of 2018 and includes the 100-bed Al Salam Medical Hospital, the Al Salam Medical Centre and the Ishbilia Medical Centre.

Saudi Arabia remains a key market for the company, with NMC having 800 beds across existing and under-construction assets in the country, according to Mr Manghat. NMC has also solidified its presence in Egypt with new operations and management contracts with Emirates Healthcare Group to manage its Egyptian hospitals - Dar El Fouad and As Salam International, which have a combined capacity of 860 beds.

The company earlier this month acquired remaining stakes in two hospitals in the UAE and Saudi Arabia that it partially owns for a combined investment of $218m.

The National