Mubadala to buy stake in US healthtech firm Zelis as it also seeks deals in China and India

Latest investment marks Abu Dhabi company's biggest deal in the healthcare sector

Mubadala is leading the Zelis deal, alongside a group of investors including Norwest and HarbourVest. Bloomberg

Mubadala Investment Company has agreed to acquire a minority stake in US healthcare technology company Zelis, marking the Abu Dhabi sovereign investment arm's largest deal in the healthcare sector even as it focuses on investments in Asia.

Mubadala is leading the Zelis deal, along with other investors including Norwest and HarbourVest, it said in a statement on Thursday. The size and value of the deal were not disclosed. Parthenon and Bain Capital remain the majority owners of Zelis.

"Zelis is helping to streamline the US healthcare financial experience, which is complex and in need of technology-driven solutions that can unlock efficiencies and create better outcomes for everyone engaged in the care journey,” Mina Hamoodi, head of healthcare investments at Mubadala, said.

“This is the largest investment that we have made in the healthcare space and our first meaningful venture into payer and provider tech, priority sub-sectors for us within healthcare IT."

Zelis operates a platform that helps to digitalise payments in healthcare and works with hundreds of health payers to manage claims and negotiate with providers. It currently serves 770 insurers in the US.

Mubadala, which invests on behalf of the Abu Dhabi government, is at the centre of the emirate’s efforts to diversify its revenue base and generate income from sources other than oil. Its interests span six continents and includes the aerospace, semiconductors, metals and mining, renewable energy, oil and gas, and petrochemicals sectors.

In recent years, it has pivoted to life sciences and pharmaceutical investments and has also expanded its healthcare portfolio at a rapid pace.

In October, Mubadala's unit Kelix bio bought four of GlobalOne Healthcare Holding’s (GHH) pharma assets in an effort to develop the UAE’s life sciences ecosystem.

In August, Mubadala and Asia's largest healthcare-focused manager CBC Group also jointly acquired UCB Pharma's unit in China.

Separately, a senior official at Mubadala on Thursday said it is a "good time" to invest in China even as many US-based investors pull their money out of the Asian country amid growing economic and geopolitical uncertainty.

"We actually think it's a good time to invest now. That said, we have to tailor our investment strategy given the current geopolitical environment," Camilla Languille deputy chief executive of Direct Investments Platform at Mubadala Investment Company, said.

"For China plays, we look at companies where the customer demand and the supply chains are both local. We prefer companies with strong cash flows, so that we have the flexibility to hold the asset for longer, should the optimal window for exit not materialise on time," she told attendees at the Milken Institute Middle East and Africa Summit held in Abu Dhabi.

Figures compiled by Bloomberg show that the volume of deals from Middle Eastern firms into Greater China has already reached a record $9 billion as of September this year.

India, the world's most populous country, has also been a "core focus" for Mubadala in Asia, Ms Languille said. The country has high asset valuations relative to other markets in Asia, but the rapid growth of Indian's middle-class is creating new opportunities.

"We're long-term investors, so we double down on themes that we believe have structural tailwinds over extended periods of time," Ms Languille said.

"In India that that's really focused on the rising proportion of the middle class [and] the upper middle class ... when people have more money, they tend to spend on two things: health care and education."

In February, Mubadala invested in India’s Manipal Health Enterprises, which operates more than 30 hospitals across the country, serving about six million patients per year.