Jadwa sees strong investment prospects for KSA’s emerging healthcare sector
RIYADH- Jadwa Investment (Jadwa), a leading Saudi private equity firm and investment bank with headquarters in Riyadh, said that it expects significant growth in the emerging Saudi healthcare sector; driven by a rapidly increasing population of approximately 3% annually with beds capacity of only 21 beds per 10,000 population.
Head of Private Equity and Investment Banking at Jadwa Investment, Saad Al-Saif, noted that there were strong signs of investor confidence in the growth potential of the Saudi healthcare sector. “The oversubscription of 12x for the IPO of Al Hammadi Company for Development and Investment (“Al Hammadi ” or the “Company”), which owns and operates Al Hammadi Hospital in Riyadh and was successfully listed on the Saudi Stock Exchange (“Tadawul”) on Tuesday , is evidence of investors’ healthy appetite for well-positioned businesses,” he said.
Commenting on the healthcare sector in Saudi Arabia, Al-Saif highlighted a significant hospital bed capacity shortfall in the years ahead – despite increased investment in hospitals in the Kingdom. He said “With continued government support, the role of private healthcare services providers in Saudi Arabia has significantly increased. Over the last five years the growth in bed capacity for private sector was 7% which is considerably higher compared to the growth in public sector bed capacity additions of 3%. However, private hospitals form only a third of the total hospitals and less than a quarter of the number of beds. This shows that there is a significant opportunity to invest in expanding the capacity of the sector and recruiting competent medical professionals, in order to support the increasing demand for healthcare services alongside the country’s population growth.”
In December 2012, Jadwa Healthcare Opportunities Fund acquired a 30% stake in Al Hammadi. The Company’s recent IPO will support its expansion strategy currently being implemented by Al Hammadi, with the majority of the IPO proceeds to be used to finance the completion of “Al Hammadi Hospital – Al-Nuzha”, the Company’s third hospital in Riyadh. The Company has also completed construction of “Al Hammadi Hospital – AL-Suweidi” which is expected to open doors to patients in Q3 2014.
Mohammad Saleh Al Hammadi, CEO of Al Hammadi said, “Since it acquired a stake in Al Hammadi, Jadwa Investment assisted the Al Hammadi shareholders and management team with respect to key initiatives including preparation for the IPO, assistance in developing a corporate governance framework, capital structuring and debt financing through commercial banks to support expansions.”
With a history that dates back thirty years, Al Hammadi is one of the pioneers in the Saudi private healthcare sector. Al Hammadi established its first hospital in the Olaya district of Riyadh in 1985 with a modest capacity of 50 beds and 12 outpatient clinics. The Company has now evolved into a leading private healthcare services provider in Riyadh with 300 beds and 74 outpatient clinics. The Company is currently working on an exciting expansion plan, which includes opening two new hospitals over the next two years, which will more than triple its capacity to 1,156 beds and over 200 outpatient clinics.