NMC Health, the UAE healthcare provider, and a Saudi state-run company signed a preliminary agreement to invest up to 6 billion riyals (Dh6.05bn) in healthcare facilities in the kingdom over the next five years.
The FTSE 100-listed NMC, and Hassana Investment company, the investment arm of Saudi Arabia’s General Organisation for Social Insurance will form the joint healthcare venture, which will acquire and develop facilities with a capacity of up to 3,000 beds and employ up to 10,000 full-time and part-time employees, the Saudi government’s media office said in a statement.
The agreement was signed at the three-day Future Investment Initiative summit that runs until Thursday in Riyadh.
“The Saudi government’s forward-looking and investor-friendly policies make the kingdom one of the most attractive destinations in the region for investment in the healthcare sector,” Prasanth Manghat, chief executive of NMC, said in the statement on Wednesday.
Saudi Arabia, the Arabian Gulf’s biggest healthcare market, is encouraging private sector involvement in its healthcare industry to help meet rising demand for medical services due to an expanding population, increased treatment costs and rising insurance coverage, according to a March report from Dubai investment bank Alpen Capital.
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Spending in the kingdom’s healthcare sector, which grew at an annualised average rate of 15.4 per cent between 2010 and 2015, is forecast to expand at a compound annual growth rate of 6.1 per cent to reach $59.5bn by 2022 from an estimated $44.3bn in 2017.
The kingdom will need the most beds in the region by 2022, estimated at 7,500. It had 470 hospitals with 70,844 beds at the end of 2016, accounting for 70 per cent of total regional bed capacity, the report said.
NMC signed in July this year an agreement to form the JV with Hassana to provide 1,489 beds in Riyadh, with 664 beds contributed by five NMC facilities and 825 beds by two National Medical Care facilities. It wasn’t clear if the new agreement includes the announcement made in July.
“The JV drives future expansion for NMC in Saudi Arabia where it will seek to take majority stakes in Saudi-based healthcare operators,” said the statement. “It will also acquire operation and management contracts to oversee private and government hospitals in the kingdom, NMC will hold a voting majority in the proposed JV, with the exact stake subject to final terms. NMC will also retain operational and management control of the assets.”