New Medical Centre (NMC), one of Abu Dhabi's oldest healthcare companies, has managed to refinance most of its debt of about Dh475 million (US$129.3m) after having a "crisis" last year, its top executive says.
The company announced at the weekend a surprise $1.2 billion sale of a 40 per cent stake to Centurion Investment that NMC will use to go on an acquisition spree of hospitals in the region and build new facilities across the Emirates. The deal values the company at $3bn.
Dr BR Shetty, the chief executive of NMC, said the new deal - struck in just 10 days - was a "big moment" that came after a tough period in the company's history.
"This is the first time I've got investment in the company," he said. "Until now, my sweat was the capital."
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In the final months of last year, credit lines were withdrawn by several banks as NMC had trouble making payments. Dr Shetty said insurance companies and others were not paying NMC on time, which led to the company's own cashflow problems.
"Banks will give money, but when the rain comes they take it away," he said. "We were growing at 30 per cent a year. We had a cashflow problem … Some of these banks give the finance and when you are in trouble, they take it away. I will never bank with them again."
But he negotiated with several new banks, including most prominently the Bank of Baroda in India, for new financing that he says will put NMC on a solid footing.
"I really hated this time," Dr Shetty said of the "crisis" period last year. "Nobody came to my rescue, except Bank of Baroda and Abu Dhabi Commercial Bank. They believe in this country."
The problems NMC faced last year are part of the larger challenges impacting private UAE companies trying to obtain new financing from banks. Al Jaber Group, one of Abu Dhabi's oldest companies, revealed last month it was in negotiations with lenders to restructure up to Dh6bn of debts.
The UAE Central Bank said loans, advances and overdrafts to the private sector decreased 3 per cent to Dh588.8bn between December 2009 and September last year. Meanwhile, public-sector lending grew, the data show, with loans to government organisations increasing 8.4 per cent to Dh99.5bn and loans to government-related entities increasing 4.05 per cent to Dh93.57bn.
Facing a tight lending market, NMC had been seeking equity investors since 2009, Dr Shetty said.
NMC had been in advanced negotiations with The National Investor, an Abu Dhabi investment bank, to sell a stake but "it was taking a long time", he said.
"The National Investor's Private Equity Division was indeed in exclusive discussions with New Medical Centre for a period of time," said Orhan Osmansoy, the chief executive. "We think NMC is an attractive asset …"
Centurion Investment stepped in several weeks ago with an offer and the deal was wrapped up quickly. The signing ceremony took place last Thursday.
All the money will be used for investments, Dr Shetty said. There are plans to build a 250-bed hospital in Abu Dhabi, a 100-bed hospital in Dubai, and a 100-bed hospital in Al Ain, as well as to acquire hospitals in Egypt and Libya. NMC is also studying building new hospitals across Saudi Arabia and India.
"I think they should do a case study of my situation," Dr Shetty said. "The lesson should be don't betray people who you support when they are in a little bit of trouble … Bankers try to squeeze businesses that need support."