Saudi’s Sulaiman Al-Habib Medical reportedly in IPO talks with banks

Saudi Arabia’s Sulaiman Al Habib Medical Group, one of the biggest hospital operators in the Middle East, is talking to banks about a potential listing in Riyadh that could value the company at $2.5bn, three sources familiar with the matter said.

The group, which operates hospitals and clinics in Saudi Arabia, the United Arab Emirates and Bahrain, has been in preliminary talks with foreign and local banks for listing and potential advisory roles, the sources said.

The company, which abandoned plans to float in 2014 as oil prices dropped and local market conditions deteriorated, could sell as much as a 30 per cent stake in the IPO, although one source said it could sell less if Saudi regulators permit.

Officials from the medical group, which was established by Dr. Sulaiman bin Abdulaziz Al-Habib in 1995, did not respond to several Reuters requests for comment.

Saudi Arabia is encouraging more family-owned companies to list in a bid to deepen its capital markets under a reform push aimed at reducing the kingdom’s reliance on oil revenues. As further encouragement, the regulator has relaxed the traditional IPO requirement to list at least 30 per cent of a company.

Saudi mall operator Arabian Centres, owned by Fawaz Alhokair Group, raised $747m earlier this year through the sale of an about 20 per cent stake, the first listing in the kingdom under Rule 144a which allows the sale of securities primarily to qualified institutional buyers in the United States.

There have been three IPOs in the kingdom so far this year, with the $923m raised the most since 2015, according to Refinitiv data.

Healthcare is one sector identified by the Saudi government as an early candidate for privatisation under its Vision 2030 economic diversification plan.

The government expects the sector to grow to $27bn by 2020, up from around $16bn in 2015, but there has been little progress on privatisations since the Vision was announced in 2016.

Over the next three decades, demand for healthcare in Saudi Arabia is expected grow exponentially as the population expands, said Mansoor Ahmed, director at Colliers International for Middle East and Africa for healthcare, education and private public partnerships.

The World Bank estimates a conservative 1.02 per cent average annual growth rate for the Gulf Arab state’s population, which means it could reach 45.1 million by 2050.

Life expectancy in Saudi Arabia is expected to extend to 78.4 and 81.3 years by 2050 for males and females respectively, from 73.1 years and 76.1 years, according to Colliers, increasing demand for geriatric, rehabilitation and home health care services.

Colliers estimates that based on international benchmarks of 4-6 beds per 1,000 population above 65 years of age, the kingdom now requires between 18,000 to 20,000 long-term care beds and this is expected to reach 50,000 – 55,000 beds by 2050.