The Greatest Investment
Dr. Mohamad Hamade, Chief Executive Officer of Amanat Holdings PJSC, offers an expert take on MENA’s healthcare investment landscape.
Macro-economic landscape: liquidity and increased M&A activity
The inflows into capital markets in 2021 are attracting attention. Global equity markets are witnessing a significant spike in retail investor activity, accounting for $1 trillion of annualized inflows at the end of August 2021 – notably higher than the cumulative inflows over the last 20 years. Confidence from encouraging vaccine statistics and a strong economic rebound from the woes of COVID-19 have stimulated growth in M&A activity and the allocation of liquidity into equity capital markets (ECMs).
Equities are seemingly the asset class of choice in the medium term, with debt capital markets less favorable given the low interest rate environment. That said, investors will likely be quite selective and target investment opportunities with robust margins and resilient growth profiles in select sectors. Still, emerging markets (EMs) seem ripe for the taking having lagged developed counterparts with a mere 4% incline in total returns compared to 18% in developed equity markets as of August this year.
Why healthcare is at the forefront of investor strategies
Healthcare has long been at the top of national agendas globally. However, the crisis brought on by COVID-19 tested the industry’s infrastructure and resilience, making healthcare even more of a priority. In response to the pandemic, the healthcare industry proved to be resilient and attractive on a riskadjusted basis, having adapted and adjusted to permanent changes that improve and enhance outcomes for all stakeholders.
Since the onset of COVID-19, one of the drivers shaping healthcare budgets is the shortage of various specialized healthcare services, including post-acute care and rehabilitation, that facilitate a more bespoke model of care for long-term patients and free ICU and acute care beds. Additionally, there has been a push towards patient-centric models with a more value-based approach towards the provision of healthcare primarily geared towards strengthening chronic care management and improving preventative care. The focus on preventative care and outcomeoriented models through AI, big data, and cost-containment systems will ultimately lead to more sustainable and favorable outcomes.
These healthcare verticals are adapting and growing, and will act as enablers to strengthen and empower the healthcare sector with HealthTech and MedTech aimed at making care more accessible, agile, and personalized. These technologies include electronic medical records, chronic disease
management, remote patient monitoring, and e-pharmacy solutions. Combined, these techdriven solutions help create a more efficient healthcare system.
MENA healthcare: the favored opportunity for investors
Looking more closely at MENA, and according to industry reports, the current healthcare expenditure in the region is nearly half that of other EMs and a third of the spending in developed countries such as the U.S. and U.K. Key demographics such as the rapidly increasing population – specifically in the 50+ age bracket – have been shaping regional government budgets. The prevalence of lifestyle and noncommunicable diseases and the shortfall in healthcare provision in the MENA region compared with other EMs or developed markets also have an impact. These factors have been the drivers of demand over the last decade and the pandemic only intensified the need for change and increased healthcare expenditure.
However, change is not possible without the support of legislative agendas. That is why MENA represents a pyramid of success. At the top of the chain, healthcare is a government priority and its importance trickles down to providers, payors, and consumers. This pyramid, alongside supportive governance frameworks and regulative infrastructure, allows for a more coherent adoption of change.
Healthcare is vital to economic success and its transformation is at the core of the U.A.E. Vision 2071, Saudi Vision 2030, Abu Dhabi Economic Vision 2030, and Egypt’s Sustainable Development Strategy for Vision 2030. These agendas require stakeholder engagement and collaborative effort to ensure the best outcomes. That is the exact reason why public-private partnerships (PPPs) have become an important advocate of national agendas.
Legislative reboot: the evolution of PPPs
The legislative and regulatory landscape has evolved in MENA during the pandemic, enabling significant change in the delivery of care and further enabling foreign direct investment. There is already an evolving landscape to empower the creation of PPPs in the region, primarily driven by more established participants including the U.A.E. and K.S.A. Essentially, the success model revolves around stakeholders including governments, regulators, and providers, collaborating on key pillars to reshape the healthcare system. These pillars include policy, governance, PPPs, financing, and technology, collectively forming the foundation of a modern healthcare system.
Amanat’s unique positioning to capture growth in MENA healthcare
Amanat is well-positioned to capture demand-led growth across the region through its healthcare platform. Today, the platform consists of the region’s largest post-acute care and rehabilitation platform across four cities in the U.A.E. and K.S.A., with the potential to develop its existing Royal Hospital for Women & Children in Bahrain into a specialized platform.
As the only listed investment company in MENA with an integrated focus on healthcare and education, it provides investors with a more favorable asset class given the recent macro-economic backdrop globally, as well as access to some of the leading private healthcare providers in the region.
Amanat is proud to work within best practice governance frameworks and has a strong track record of investing and divesting at attractive multiples, having transacted nearly $500 million in M&As since the beginning of 2021. Even after its share price doubled from the lows in 2020, Amanat still offers investors a safe haven amidst single operators in the region with higher risk at a much lower price to earnings multiple.
Amanat’s value proposition lies in the unique offering of a diversified platform with focus on specialized healthcare supported by strong demographics and proactive management teams.
Today, investors are looking to develop platforms that can build scale, benefit from synergies, attract talent, and ultimately create more attractive and asset-light models that are built for premium exits in the future. These are the platform models that Amanat is building, providing global partners and investors with the opportunity to tap into MENA healthcare equities with unrealized upside potential.
“Amanat’s value proposition lies in the unique offering of a diversified platform with focus on specialized healthcare.”