Abu Dhabi's PureHealth will not be buying hospital operator NMC

Dubai: The Abu Dhabi healthcare giant PureHealth will not proceed with buying out NMC Health, one of the oldest privately-owned hospital operators that was set up by B.R. Shetty in the mid-1970s.

NMC, which has multiple facilities in the UAE, is currently overseen by a management that came into being after a lengthy court process. This happened after the previous NMC management was found out for diverting funds and cooking the books.

NMC then went into administration and with a mandate to help NMC recover operationally and then find ways to claw back the missing billions and secure a long-term future.

After the current management took over in 2023, NMC had a 3-year timeframe to reset its operations and also find a new buyer.

This is when PureHealth came into the picture. Owned by the Abu Dhabi investment group ADQ, PureHealth had the deep cash position to pick up NMC.

But the deal fell through over what NMC should be valued at, according to sources. “There was a certain asking price beyond which PureHealth was not willing to consider paying for NMC,” said a source who had been closely tracking the negotiations.

“That’s because it would have been higher than the market value.

“If it had happened, this would have gone down as one of the most decisive takeovers in UAE and GCC corporate history. That’s not happening now – what I have heard is PureHealth decided it won’t go ahead with the deal last week.”

In fact, in recent weeks, healthcare and banking industry sources had been talking privately about PureHealth walking away from the deal, and now it has happened. (Bloomberg had earlier reported that the deal was not going forward.)

ADCB – the biggest lender to NMC - owns about 40% of the hospital operator, while the remaining are with multiple lenders.

“Although the majority of shareholders were willing to sell NMC at a fair market value - which was reasonable to PureHealth, ADCB wanted a transaction price aligned with its recorded valuation in financial statements,” said a source.

“This was significantly higher than the asset's fair value.”

What next for NMC?

Now that the deal with PureHealth is rated as a no-go area, there are other avenues NMC will need to pursue, to clear the obligations to its creditors and lenders.

Recently, NMC had issued a statement talking taking a possible IPO route, and for which it had appointed a consultancy to evaluate its chances.

The UAE's healthcare sector is at a particularly fluid point in time, with significant and new investments going into developing the next generation of hospitals and clinics. Companies such as Aster DM healthcare (now majority owned by Fajr Capital), ADX-listed Burjeel (which also owns hospital brands such as Medeor, Lifecare and LLH) and Prime Healthcare in expansion mode.

Then, there is M42, which is a healthcare holding company created by Abu Dhabi's Mubadala and G42.

"The big question is whether NMC will go the IPO way to pull in funds or wait for a new suitor," said a senior healthcare industry source. "If it's the second option, it will need someone like PureHealth, which can draw on ample resources."

Healthcare assets in the UAE and Saudi Arabia have been in the investor spotlight, with the Kingdom's Tadawul stock market seeing multiple hospital operators seek listings.

In the UAE, there could be more deals such as the Fajr Capital one for Aster DM, which also provides the latter with new funds to pursue hospital expansion plans.

NMC sells stake in fertility unit

Interestingly, NMC late last week confirmed the sale of its 65% stake in Fakih IVF Fertility Centre to Blue Ocean Health Group, with the deal expected to be completed in 2 months. Once done, Blue Ocean will 'wholly own Fakih IVF'.

"This transaction is part of NMC’s strategy to further invest in the expansion of its core multi-specialty healthcare services, including the enhancement of existing facilities and the strategic growth across Dubai and the Northern Emirates," said a statement.