TIDMNMC
RNS Number : 8587Q
NMC Health Plc
11 June 2018
11 June 2018
NMC Health plc
(the "Company" or "NMC")
NMC enters into a transformational partnership with Hassana
Investment Company to create a new healthcare platform in Kingdom
of Saudi Arabia
NMC Health plc (LSE: NMC), the leading United Arab Emirates
private healthcare operator with international operations across 13
countries, is pleased to announce the signing of a non-binding
agreement to form a joint-venture healthcare platform with Hassana
Investment Company ("Hassana"), the investment arm of the General
Organization for Social Insurance ("GOSI"), which is the largest
pension fund in Kingdom of Saudi Arabia ("KSA").
-- Proposed formation of a new national healthcare company, pursuing a unique strategy in KSA
-- JV to be formed through contribution of existing assets by both NMC and GOSI's investment in Tadawul-listed National Medical Care Company ("CARE")
-- At inception, the platform would be one of the largest
private healthcare operator in KSA by beds capacity
-- NMC and Hassana have ambitious plans to expand and benefit
from the strong growth potential of the healthcare sector in KSA
through the proposed entity
-- GOSI would continue to own a significant indirect stake in CARE through this proposed JV
-- The proposed partnership would drive NMC's strong expansion in the KSA healthcare market
Larger platform to deliver more efficient deployment of capital
in KSA
The proposed JV would create one of the largest private
healthcare platforms operating in KSA today. The JV would have a
strategically unique position in the country, with a strong
foothold in Riyadh, the single largest healthcare market in KSA, as
well as in multiple smaller, underserved cities. The enlarged
organization is expected to benefit from economies of scale,
allowing more efficient deployment of capital, increasing patient
choice and optimizing returns across multiple assets. Furthermore,
in-line with NMC's existing strategy, the proposed JV platform
would continue to build a strong pan-KSA presence, unlocking
considerable synergies across its facilities in the process. These
are expected to cover business segments such as revenue cycle
management, procurement, HR and IT systems among others.
Key terms of the agreement
-- GoSI/ Hassana will transfer their 38.9% stake in CARE at a
price of SAR 70/share, implying an attractive 2018E EV/EBITDA
multiple of less than 15x
-- NMC will contribute all of its existing KSA-based assets as
part of the formation of the JV platform
-- Under the terms of the agreement, there will be revaluation
of NMC's assets, representing considerable value accretion at the
joint-venture as well as NMC Health plc level
-- The JV will have a combined bed capacity of 1,489 (664 beds
contributed by NMC and 825 by CARE)
-- Formation of the JV is subject to regulatory approvals and
signing of definitive agreements after completion of necessary due
diligence by both the parties
-- For the year ended 31 December 2017, NMC reported gross
assets of US$3.0 billion and profits before tax of US$210.4
million. For the same period, CARE reported gross assets of
US$380.0 million and profits before tax of US$26.7 million
NMC will retain a majority stake, as well as operational
control, in the JV
NMC will hold a voting majority in the proposed JV, with the
exact stake subject to final terms. Consequently, NMC will fully
consolidate the JV financials. NMC will also retain operational and
management control of the assets held by the JV.
The proposed JV platform will serve as the main vehicle of
future expansion for NMC in KSA. The proposed JV will seek to take
majority, as well as minority, stakes in KSA-based healthcare
operators (organic and inorganic investments), along with acquiring
O&M contracts to manage private and government sector hospitals
in the country.
The JV platform is expected to benefit significantly from NMC's
operational expertise in the healthcare sector, as well as
Hassana's local market knowledge and strategic position as a long
term financial investor. The formation of this platform represents
the strong commitment by both NMC and Hassana towards the KSA
healthcare market.
Prasanth Manghat, Chief Executive Officer of NMC, commented:
"We identified KSA as a key strategic priority for NMC and the
proposed partnership between NMC and GoSI/ Hassana would offer a
tremendous opportunity for both the companies to better serve the
KSA healthcare market. The Saudi government's forward looking and
investor friendly policies make the Kingdom one of the most
attractive destinations in the region for investment in the
healthcare sector. Moreover, Hassana's strong commitment to the
sector, particularly in the form of strategic investments, remains
a vital means of attracting and developing healthcare expertise in
the country. NMC has been the most progressive foreign entrant in
the Saudi healthcare market, and the proposed partnership with
Hassana would accelerate the process of bringing international best
practices to KSA. In addition to being ideally positioned to
participate in the highly anticipated privatization program in KSA,
the proposed JV platform will continue to fill service gaps in the
market. This is expected to be achieved through a wide range of
means, be it through the development of IVF, long-term care and
cosmetics segments or the introduction of pediatric centers of
excellence and state-of-the-art cancer centers."
Saad bin Abdulmohsen Al-Fadly, Chief Executive Officer of
Hassana, commented:
"The proposed partnership between Hassana and NMC is driven by
our view that healthcare in Saudi Arabia is one of the most
attractive markets for strong long-term growth. The proposed JV has
ambitious growth plans across different healthcare sub-sectors,
with both partners committed to compounding returns over the
long-term, whilst providing best-of-class services to patients.
Benefiting from Hassana's role as a strong long term financial and
strategic investor and NMC's expertise as a sophisticated and
successful healthcare expert in the region, the JV platform would
be well-positioned to become one of the most dominant healthcare
players in Saudi Arabia and is ideally positioned to capitalize on
the health care privatization program in Saudi Arabia in line with
the country's Vision 2030 initiatives."
Enquiries:
NMC Health plc Media:
Prasanth Manghat, Chief FTI Consulting, London
Executive Officer
+971 (0)50 522 5648 Brett Pollard / Mo Noonan
/ Victoria Foster
Prashanth Shenoy, Chief
Financial Officer +44 (0)20 3727 1000
+971 (0)56 3290545
Asjad Yahya, Investor Relations FTI Consulting, Gulf
+971 (0)56 2190975 Shane Dolan
+971 (0)4 437 2100
About NMC Health
The NMC group (the "Group") is the leading United Arab Emirates
private healthcare operator with an international network of
hospitals and operations. The Group currently operates or manages
over 150 assets across 13 countries. NMC is also ranked as one of
the top 3 in-vitro fertilisation ("IVF") operators globally. The
Group is also a leading provider of long-term medical care in the
UAE through its subsidiary ProVita. Pursing an aggressive
international expansion program from 2016, the company now has 35%
of its licensed bed capacity in the Kingdom of Saudi Arabia (KSA),
where the company has introduced long-term and multi-specialty care
services. The enlarged company received over 5.7 million patients
in 2017. The Group is also a leading UAE supplier of products and
consumables across several key market segments, with the major
contribution coming from healthcare related products. The Group
reported revenues of US$1.6 billion for the year ended 31 December
2017.
In April 2012 NMC was listed on the Premium Segment of the
London Stock Exchange. NMC is a constituent of the FTSE 100 Index
and MSCI Global Standard Index.
About General Organization for Social Insurance / Hassana
Investment Company
General Organization for Social Insurance ("GOSI") is one of the
largest pension funds in the world by assets under management. It
is a government administered pension fund covering private sector
employees in Saudi Arabia. Hassana Investment Company is the
investment arm of GOSI, managing all investments on behalf of the
pension fund across all asset classes.
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END
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