April 2, 2012 5:36 pm

UAE health group raises £117m in London IPO

NMC Health, an Abu Dhabi-based healthcare provider, has raised £117m from a flotation on the London Stock Exchange amid signs that initial public offering activity is picking up in Europe.

The United Arab Emirates hospital operator sold 55.7m shares at 210p each, towards the lower end of the 200p to 280p price range initially indicated by bankers. The issue price values the company at about £390m.

“We could have priced it higher, but we and the company wanted to see it trade well in the after-market,” said Christopher Laing, managing director of emerging equity capital markets at Deutsche Bank, the IPO’s global co-ordinator and bookrunner.

NMC’s shares rose to as high as 225p in initial trading before dropping to a low of 207p.

Although NMC, founded by BR Shetty, an Indian businessman, operates in the defensive healthcare sector, the flotation of an emerging market company in London underlines the tentative recovery of Europe’s IPO market, after a dismal second half of 2011.

The amount raised in global IPOs slumped 43 per cent from the fourth quarter of last year to just $15.5bn in the first three months of 2012, according to Thomson Reuters data. But Europe saw two large deals in late March, nurturing hopes that more companies may seek to list after Easter and the release of first-quarter earnings figures.

In March Ziggo, a Dutch cable company, raised €804m and DKSH, a Swiss trading house, raised SFr821m ($124m) – the two largest global deals in the quarter. The London market, however, has remained relatively quiet for IPOs since Glencore listed last May.

“Six months ago NMC’s IPO wouldn’t have been possible, no matter how good the company is,” Mr Laing said.

The hospital group, the largest private healthcare provider in the oil-rich UAE, plans to use the flotation proceeds to buy Healthcare Suites in Dubai and build a maternity-dedicated hospital in Abu Dhabi. Longer term it will look to expand elsewhere in the Middle East region, starting with Qatar, said Binay Shetty, the chief operating officer of NMC’s healthcare division.

Some emerging market companies, particularly in the Gulf, have occasionally been met by scepticism by London investors, given the region’s sometimes poor corporate governance and transparency.

Damas, a regional jewellery chain and gem retailer that listed on Dubai’s flagship Nasdaq Dubai exchange in 2008, shocked investors in 2010 when it emerged that the company’s founding family had conducted $165m in “unauthorised transactions”, which eventually forced the company into a debt restructuring.

However, Mr Laing said Damas had not been a matter of concern to investors in NMC, and company executives said that they would adhere to the standards required by a premium London listing.

“We have four independent directors, and if we wanted to act freely as a majority shareholder we wouldn’t have listed in London,” said Khalifa Bin Butti, executive vice-chairman of NMC. “We don’t want to lose our good reputation.”

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