Will more GCC health care businesses take same route?
PHARMA IPOS SEE SUCCESS IN UAE, SAUDI ARABIA: MARKET FLOATS, OVERSUBSCRIBED SEVERAL TIMES, ARE EXPECTED TO ACT AS TAILWINDS FOR NEW LISTINGS
UAE’s health care holding company PureHealth has just signed off on Dh16.3 billion in 2023 revenues — it’s first results after a stellar IPO which was oversubscribed 483 times in December.
In Saudi Arabia, Avalon Pharma, a generic medicine producer, met with a solid response to its IPO, with a subscription coverage of 54.27 times and demand hitting SR2.67 billion, exceeding the set cap of SR1.64 billion.
Broader momentum
This success, along with PureHealth’s performance, has fuelled speculation about potential health care businesses in the Gulf considering their own stock market floats.
“GCC’s health care sector is having a moment, and the PureHealth IPO, more than anything, showed the appetite from retail and institutional investors for a stake in the wider sector growth,” said a Kuwait-based market analyst.
Looking at the Avalon Pharma float, institutional book-building recorded orders of SR68.27 billion, with a coverage of 138.76 times.
Transformative factors
“Many health care companies in the Gulf are looking for opportunities to expand their market share, improve operational efficiency, and enhance profitability,” said Vijay Valecha, chief investment officer at Century Financial. “The ongoing IPO momentum in the GCC region — especially in Saudi and UAE — is expected to act as a tailwind for health care stocks and new listings too.
“Retail and institutional investors have been looking for ways to diversify investments, given the ongoing geopolitical crisis. This is evident from most IPO performances in the region.”
Along with its 2023 financials, PureHealth also provided a likely state of affairs for the region’s health care sector.
“Throughout the Middle East — and specifically in the UAE — a confluence of demographic shifts, tech advancements and a growing focus on quality health care services is poised to revolutionise the region’s health care landscape,” the PureHealth market outlook states.
“The health care market in the Mena region is projected to grow at a CAGR of 11.7 per cent, surging from $185.5 billion in 2019 to $243.6 billion in 2023. In 2022, the health care expenditure in the GCC was estimated at $105 billion, with the UAE alone accounting for 25 per cent of the total health care spending in the GCC.”
Middle East health care sector is undergoing rapid transformation — there’s the growth in population, there is an ageing demographic, and there’s the increased demand for quality and affordable health care.”
Vijay Valecha | Chief investment officer at Century Financial
Looking at the Avalon Pharma float, institutional book-building recorded orders of SR68.27 billion, with a coverage of 138.76 times.
Post-Covid shift
There were also some notable deals in the health care sector, such as Fajr Capital acquiring a majority stake in UAE-based Aster DM Healthcare and Saudi Arabian group Abdul Latif Jameel Health acquiring a majority stake in Genpharm, specialises in treatment of rare diseases.
“In the last decade, Karim Smaira and Kamel Ghammachi [founders of GenPharm] have led their team to focus on delivering niche therapeutics for rare diseases as well as becoming pioneers in the delivery of gene therapy which has seen innovative cures and treatments to patients in the region,” said Akram Bouchenaki, CEO of Abdul Latif Jameel Health. “It is this innovation and drive which attracts us to Genpharm.”
Abdul Latif Jameel Health is part of a group that’s been there for more than eigh decades. It also signals the sizeable interest building among UAE, Saudi and GCC business groups for direct investments in health care opportunities.
“The post-Covid scenario has completely changed mindsets on equity investments,” said the Kuwait-based analyst. “The biggest Gulf businesses today want equity in established health care operators. And this support is what will help create new hospitals and specialisation in treating the growing populations of the Gulf.
“Deals like the one for Aster will keep happening in other GCC markets with higher frequency.”
And the speculation keeps building as to which would be the next big deal in the Gulf’s health care space. Or, for that matter, who’s up next for a health care IPO.