Dubai’s Foundation Holdings Co. bought a stake in a Saudi Arabia-based primary health chain, marking its second investment in the kingdom’s fast-growing market for medical care, and said it plans to list the firm in the next two years.
The healthcare and education investment firm acquired 51 percent of Shifa Al Munthaza Polyclinic, chief executive officer Abhishek Sharma said in an interview. Foundation Holdings plans to invest about SR250 million ($67m) in Saudi Arabia’s primary healthcare sector, he said, almost half of which was spent on the Shifa deal.
The kingdom’s primary healthcare market is expected to grow to SR50bn in 2025 from 28.6bn currently. “Healthcare in Saudi Arabia is one the fastest growing markets in the region,” Sharma said.
“We invest in local champions to make them bigger and stronger, and then we take them public and make them more sustainable,” he added.
Shifa Al Munthaza was established in 1992 and serves over a million patients annually through 16 facilities. EFG-Hermes Holding acted as a financial adviser on the transaction, with King & Spalding and Khalid Nassar & Partners serving as the legal counsel.
Foundation Holdings is planning to list Shifa and another Saudi portfolio company, medical devices distributor ProMedEx, in the kingdom, the Middle East’s top market for IPOs over the past year.
Both firms are expected to start trading on Nomu, the parallel market for smaller listings in Riyadh, over the next 18 to 24 months. Sharma said each company is currently worth about SR500m, and valuations could rise to SR750m to 1bn riyals in the next three to five years.
“In the market volatility caused by the pandemic, the healthcare sector has broadly outperformed,” he said in a statement. “We are convinced that Saudi Arabia is set to become a focal point for healthcare.”
Sharma added that Foundation Holdings is weighing other acquisition opportunities in Riyadh and in the kingdom’s eastern province.
In May, Foundation Holdings signed a memorandum of understanding (MoU) with Bahrain Economic Development Board (EDB) to launch its affiliate companies in the kingdom – Right Health and ProMedEx, a $30m-worth investment.
The launch of primary care provider Right Health will be centred around a new research and development centre that, along with a chain of outpatient and diagnostic facilities and pharmacies, will offer a clinical capacity of 150 doctors and nurses capable of serving as many as 500,000 patients annually.
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