Friday, Feb 18, 2011
Gulf News
Divestment in health care arm is part of plan aimed at corporate expansion
Dubai The founder and CEO of the NMC Group, Dr B.R. Shetty has always been one for the expansive gesture. He has always sought the horizon rather than just the immediate vicinity when it comes to strategy.
So when he decided to go in for a private equity sale of his flagship, NMC Healthcare, it was to part with as much as 40 per cent of the shareholding.
The selloff process started in the fourth quarter of last year before it was sealed just the other week with Abu Dhabi headquartered Centurion Investments coming on board.
The funds that come along with the new partner would seed a new round of expansion in health care facilities in the UAE and the wider Middle East and North Africa territory and India.
The timing makes sense. A growing population base and mandatory health insurance have made health care the one to watch out for in the medium-term. This is also an industry where an established name retains an inherent advantage over the more recent entrants.
Dr Shetty offers the detail and the bigger picture on how he intends to usher in the new growth phase at NMC Healthcare.
GULF NEWS: What was the prompt to seek new partners in your flagship?
Dr B.R. Shetty: We have been enjoying profits for almost 34 years. During this period the NMC brand has become imprinted as the health care provider of choice in the UAE and, more recently, in the Gulf. The time has come to push it to the next level.
This is the right time to go in for new investors as I see it answering a strategic requirement.
It not only helps us achieve what we have planned, but also creates an opportunity for new investors to share our success in other parts of the world where we are going to take the brand, especially in the Mena region.
For sure a strategic investor will bring opportunities to the business.
But why specifically now?
In any recent mention of prospects for the region’s health care industry, the only numbers coming through repeatedly are in the tens of billions of dollars over the next five years and more.
I am not going for a big chunk of it, but it was felt an opportune moment to expand the business to markets where we are unrepresented.
When the private equity sale was launched, the idea was to have on board a group of investors. Now you are aligned with just one entity, Centurion Investments. What explains the switch?
We understood it will be more prudent to have like-minded strategic investors.
Today, I have got a strategic investor in Centurion Investments. The whole private equity process might have taken time, but there was never any heartburn for me. I knew what was needed and was prepared to wait for it. If at all the delay was worth it as the value-addition now is exponentially more than any I had expected at the launch of the process.
When do you expect to start spreading the funds around for the expansion?
It’s started already, I don’t believe in waiting for tomorrow.
Do the expansion plans exclude the UAE?
We have got eight top-notch health care facilities in this country, but the need of the hour is for more.
By expanding the hospitals we will be able to cater to all those who patronise us by keeping the waiting time as minimal as possible. In this way it will become easier for them to get the quickest possible consultation that they need.
That’s why we will have further greenfield hospital projects in Abu Dhabi and Dubai.
NMC Healthcare will be meeting all variants of the health care requirements — specialty, super-specialty, health centres, family clinics and tertiary. All areas will be covered comprehensively.
Have you already acquired the land for the new projects in the UAE?
We have already acquired the land in Abu Dhabi and Dubai.
Beyond the Gulf, which are the markets you see as offering maximum potential for you?
In no particular order, I would say Libya, Turkey and Egypt.
India’s very much in our plans and I also see a possibility to do something in Colombo.
But aren’t you already in Egypt?
I would like to clarify that — the investment I have made into a hospital in Alexandria is in a personal capacity. One-and-a-half years ago, I acquired a listed hospital, and the hospital is expanding from a 120-bed into a 400-bed ultra-modern health care facility.
NMC Healthcare itself could very well have a future role in Egypt.
Does the placement include UAE Xchange, the money exchange company within the group?
No, the placement is strictly limited to the health care division. Probably next year we will go in for the IPO of UAE Xchange.
In the last year, we have brought a number of related businesses we had into the NMC Healthcare fold.
All businesses are equally strategic and important to us; I have no intention of closing down any. If at all, we will try and grow them more aggressively.
You also have an application pending on a banking licence in India. What’s the status of that?
We have presented all the required papers conforming to the guidelines. I am hopeful that we will get to the next stage soon.
Looking at the way you had grown the business in the 30-odd years, it did seem highly unlikely you would bring more shareholders on board and dilute your stake. Wasn’t it always meant to be a family-owned enterprise?
I will correct that impression — there are two families involved. The business is owned by two families — there’s the former UAE Minister of Justice, Abdullah Mazroui’s family and there’s mine. Following the completion of the private placement, the original promoters’ stakes will be diluted accordingly.
As to the question of NMC being a family enterprise, I believe that the business should be operated professionally and within the framework of corporate governance.
My children are at the helm of affairs not by right. It is truly because of the fact that they deserve it and have rightfully earned it.
Apart from all of the new hospital projects, what’s new coming from your side?
There’s education, but this will be a private venture.
I am looking to join in the initiative by the government of creating quality schools in the UAE, especially Abu Dhabi.
The government will provide the land, and I will take it from there and make it a point to build the best facilities and to offer schooling at affordable rates. Health and Education — if these two aspects are taken care off, everyone benefits.
Where do you think NMC Healthcare will be in five years in terms of turnover?
Maybe a $1 billion (Dh3.67 billion) company. If this is to be attained, we will require a 250 per cent growth from our current levels. The way I look at it, that’s well within our grasp.
So some long hours ahead of you, by the sound of it.
You are 100 per cent right. I am the last man to keep money in the bank.
ABDUL RAHMAN/Gulf News archive
Positive outlook
Dr B.R. Shetty, CEO of NMC Healthcare Group, looks forward to the opportunity for new investors to share in the success of the company in other parts of the world where he hopes to take the brand.
DR B. R. SHETTY: FOUNDER AND CEO OF THE NMC GROUP
By Manoj Nair?Associate Editor
Gulf News 2011. All rights reserved.
