Is UAE hospital operator NMC going to be bought by ADX-listed PureHealth?

Dubai: The Abu Dhabi headquartered NMC hospital network could soon have a new owner, with ADX-listed PureHealth’s name being suggested in what could be one of the UAE’s biggest corporate takeovers.

If the deal happens – and banking sources say it’s more or less a ‘done one’ – NMC could come under PureHealth’s ownership at some point in 2025.

PureHealth - which had a profit of Dh1 billion for H1-2024 - has not responded to queries related to the NMC takeover as of this moment.

PureHealth will get a network of hospitals that are ‘operating at peak capacity’ and is ‘profitable’, according to banking industry sources.

NMC was founded in the mid-1970s by Indian businessman B.R. Shetty and over the decades emerged as the biggest privately-owned healthcare operator in the UAE.

If the NMC takeover happens, this would be the second big deal in the UAE healthcare sector in recent times. In April, a consortium led by Fajr Capital bought a majority stake in Aster DM Healthcare's GCC operations. 

NMC will finally find an anchor

But it will be NMC that will, if the deal goes through, find closure after over 3 years of turmoil and calmer waters since March 2022, when lenders and creditors led by ADCB took over the operations and worked to turn it around.

But the period between December 2019 until March 2022 was indeed turbulent, when it was revealed that NMC had understated its financials and had debt commitments of well over $4 billion.

The worst part of it was that much of those funds were untraceable, and which immediately led to the then management exiting and skipping town. (Investigations are ongoing to trace and retrieve the missing funds and bring the culprits to justice.)

In April 2020, a court in the UK placed NMC Health under administration. (This was because NMC Health at the time was listed on FTSE.) 

In March 2022, lenders led by ADCB took over control of the NMC operations with a $2.25 billion facility. Their stated purpose was to oversee NMC's running and lead up to a possible sale in about 3 years. (When the creditors took control, a debt-equity swap took place and ADCB placed 3 members on a newly constituted NMC board of directors.)

In June this year, NMC appointed Rothschild & Co and JP Morgan to review 'strategic alternatives' for its shareholders. At the time, the NMC CEO, David Headley had said, “We are pleased to explore strategic alternatives for the company at an exciting time in the UAE." (Headley was specifically brought in by the creditor team to work on an operational turnaround and make NMC’s numbers health enough to attract a new buyer.)

NMC has a workforce 12,000 employees serves more than 5.5 million patients annually.

"The bankruptcy procedures allowed NMC to focus on the work without the burden of legal cases against it," said a banker. "If the PureHealth deal happens, this will indeed be a big moment for corporate turnarounds in the UAE and Gulf markets."

PureHealth provides financial clout

If PureHealth takes over, it can free up NMC from any future ‘financial pressures or changes in the market environment’, said a banking source. “For NMC, a timely acquisition by PureHealth would not only bring much-needed financial stability but offer a fresh start after years of complex challenges.”

PureHealth is the UAE’s biggest integrated healthcare holding company, with assets that include major hospitals, super-specialty care, health insurance, clinics and labs. Recently, it has been busy with overseas acquisitions too, in the US and the UK.

It was in December 2023 that PureHealth went for an IPO, and which then translated into one of the heaviest oversubscriptions in the UAE.