Burjeel Holdings’ initial public offering (IPO), with a price range of Dh2 to Dh2.45 per share, is now accepting subscriptions. The largest operator of hospitals and clinics (by capacity) in the UAE is floating 11% ahead of an ADX listing on October 10, implying an equity value of $2.7 billion to $3.3 billion.
The final offer price will be announced October 5.
Stock market floats in Abu Dhabi have received an overwhelming response this year, and analyst feedback is that Burjeel will easily mop up local retail investor interest. “In terms of institutional backing, Burjeel has already received heavy backing – from Abu Dhabi’s International Holding Co. (IHC) buying 15 per cent just before the IPO announcement,” said an analyst.
“Local retail investors will just follow that lead.” (IHC has not revealed the transaction cost on the 15 per cent stake buy.)
The Burjeel promoters expect to sell 350.33 million shares, which represent 7 per cent of the issued share capital. The IPO size could be increased at any point before the end of subscription period. The offer also includes 200.39 million new shares to be issued, representing 4 per cent of the issued share capital.
Assuming all the shares are sold, the size of the IPO will be around $300 million to $368 million.
First up, Burjeel will be using part of the funds raised for the push into Saudi Arabia, which would make it the third GCC market it is in after UAE and Oman. The first of the planned Saudi projects could happen shortly, most likely through a joint venture. Burjeel is committed to spend up to $1 billion over the next seven years in the Kingdom.
The Saudi initiatives “will demand big investments, but the future returns will be just as sizeable,” according to a consultant for the healthcare sector. Burjeel will likely use PPP opportunities in this area, which would reduce the need for greenfield projects. Saudi Arabia needs to significantly expand its healthcare capabilities, especially through private investments.
