Saudi Arabia’s healthcare sector is expected to grow significantly in the coming years, said a Riyadh-based private equity firm and investment bank.

Jadwa Investment, which has strong ties with leading health infrastructure provider Al Hammadi Company for Development and Investment, said the growth will be driven by a demand based on a rapidly increasing population of approximately three per cent annually against an availability of just 21 beds per 10,000 people.

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 the IPO of Al Hammadi Company for Development and Investment, which owns and operates Al Hammadi Hospital in Riyadh and was successfully listed on the Saudi Stock Exchange (Tadawul) on Tuesday (July 15), is evidence of investors’ healthy appetite for well-positioned businesses,” he said.

Al Saif highlighted a significant hospital bed capacity shortfall in the years ahead, despite increased investment in hospitals in the country. “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 seven per cent which is considerably higher compared to the growth in public sector bed capacity additions of three per cent.

“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 per cent 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 the third quarter of this year.

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 30 years, Al Hammadi is one of the pioneers in the Saudi private healthcare sector. The Company has evolved into a leading private healthcare services provider in Riyadh with 300 beds and 74 outpatient clinics.

The company is currently working on an 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. – TradeArabia News Service