Investment firm plans private placement for Indian healthcare firm ahead of potential IPO
Foundation Holdings, a Dubai-based healthcare and education investment company, plans to finalise a deal to acquire a nursery operator and two more companies in the healthcare sector in the United Arab Emirates by the end of 2018, the company’s CEO has said.
Abhishek Sharma told The National newspaper last month that it was in advanced talks to buy an international pre-school provider in the UAE, expecting the transaction to conclude by the end of this month.
In an interview with Zawya on Sunday, Sharma said discussions regarding the acquisition of the nurseries business were still ongoing. “Normally, a deal will take anywhere between three and six months to close. So inshallah (God willing), we are moving in the right direction.”
Asked when the deal is expected to close, he said “this year”, without giving a specific timeframe.
He added that the company plans to acquire two more businesses in the healthcare sector – in Al Ain and in Dubai.
“When we started the business (in the healthcare sector in the UAE) at the start of the year, we were serving about 350,000 patients within the local geographies of Dubai and Ajman mainly, but once we close those two acquisitions underway we intend to get closer to 850,000 patients,” Sharma said.
He did not give an exact figure for the size of investments, adding that the company’s investment range is usually between $15 million and $40 million per project.
Foundation Holdings was established in November 2016 with the aim of deploying capital of 2 billion dirhams ($544.6 million) over a five-year period. The firm invests directly on behalf of Gulf-based family office stakeholders, or through other companies it advises, in the healthcare and education sectors. He said the company currently runs around a dozen health facilities in the UAE, where it provides a budget service to lower-income workers, and has plans to enter India and Saudi Arabia in the near future.
“India is a super-exciting geography, because what we are seeing more and more (is) that historically everyone was putting money in America and the west. Now, with China and India becoming such dominant players, a lot of people are asking how to access the second-fastest growing market, India,” Sharma said.
“We are now in the middle of closing a pre-IPO transaction in India which we intend to announce in the next 15 days in the healthcare sector. Typically, a pre-IPO placement occurs when a portion of an initial public offering (IPO) is placed with private investors for up to 18 months before the IPO is scheduled to hit the market. Typically, private investors in a pre-IPO placement are large investment firms or hedge funds that are willing to buy a large stake in the company,” he added.
Specialist Saudi hospitals
Sharma said the company is looking into investments in single-specialisation medical services in Saudi Arabia in the next few years.
“Healthcare today requires more specialisations because there is a lot of generalists in the market, especially the Saudi market, in my opinion. In Saudi Arabia, there are a lot of general hospitals already. The gap we see is in certain specialties, for example diabetes,” Sharma said.
“We are looking at single-speciality operations facilities, since single specialities are often scalable…We are also looking at ophthalmology (eye treatments), as that is one of the fastest growing subsectors in Saudi Arabia. Dust storms, sandstorms, heatwaves, aridness and humidity in different cities of the kingdom, as well as the increase in air pollution, are driving sales growth in eye care,” he added.
He said the company has not yet set a certain timeline or an amount of investment for such projects in Saudi Arabia, but added that he was optimistic that the kingdom’s growing population would eventually position it as a market leader in the two sectors in the Gulf Cooperation Council region.
The kingdom is the most populous nation in the GCC with 32.5 million people, according to the Saudi General Authority for Statistics official website.
When asked where he would advise companies looking to invest in healthcare or education in the UAE and Saudi over the next couple of years, Sharma said: “I would say pre-k (kindergarten) opportunity right now is huge in the UAE and Saudi.
“It is huge potential with a low-risk. There is no market leader, it is very fragmented, with a double-digit market growth and low capital,” he added.
“And there is a crying need from parents of a good quality pre-k as we speak,” he said.
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