Want to buy some shares in an Abu Dhabi-based hospital and healthcare centre operator?
Well, if any element of your ISA, life policy or pension tracks the FTSE 100, you will shortly be a shareholder in such an entity.
That’s because NMC Health, the largest private healthcare provider in the United Arab Emirates, has just been promoted to the UK’s leading stock index.
It is possibly the least-known business ever to have made it into the Footsie. So what does it do and what are its prospects?
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Well, it’s actually quite an inspiring story which began in 1973, when Bavaguthu Raghuram Shetty arrived in Abu Dhabi from India with just $8 in his pocket having qualified in pharmacy.
His arrival in the country was quite fortuitous, as he told The National, the UAE-based English language newspaper, in 2014: “My sister was going to marry and I would provide her dowry.
“I didn’t want to take money from the family so I borrowed it from a bank and then found I couldn’t repay it. My mother offered to repay it for me, but I’m a man. So I decide to come to the UAE. It was a new country, a land of opportunity.”
Mr Shetty quickly spotted that pharmacy was underdeveloped in the UAE and soon set himself up as a pharmaceuticals salesman.
But he then realised that there was a bigger opportunity in healthcare and so, in 1975, set up a pharmacy and small clinic in which his wife, Chandrakumari, was the only doctor.
He recalled: “I started the first clinic in 1975 in a small building. As I could not afford to appoint an expensive doctor, my wife was the only doctor who worked for me in the clinic, which had a pathology lab, X ray machine and a small pharmacy, too. People laughed at me, because, at that time, no-one was charging for treatment.”
Funds were so tight that he could not even afford to pay Mrs Shetty a regular salary: “When we did not have an ambulance to carry critical patients, I used to have to carry even very heavy patients on my shoulders.”
Over the subsequent 42 years, the business has grown substantially. It now operates 45 facilities in eight countries and, last year, treated 4.6 million patients.
In 2012, it became the first company from Abu Dhabi to float on the London Stock Exchange, crystallising a fortune for Mr Shetty and his family, who still retain a 24.3% stake in the business.
With NMC now enjoying a stock market value of £5.5bn, that shareholding is worth more than £1bn, putting Mr Shetty in the list of India’s richest 100 people.
He isn’t stopping there. Announcing the company’s latest results, in which it reported a 39% rise in half-year net profits to $97.8m on sales of $775m, Mr Shetty last week said the company was on the lookout for further acquisition opportunities.
Cora McCallum, analyst at broker Investec Securities, said of the performance: “The half-year results demonstrated solid delivery of NMC’s strategy to expand into higher value services and new territories outside the UAE.”
So you can expect to hear a lot more about this business.
Its elevation to the Footsie, though, is going to create a headache for index tracker funds that seek to replicate the Footsie’s performance.
NMC has a ‘free float’ of just 40%, in other words, only two-fifths of its shares are tradable on the open market with the rest being held by large shareholders such as Mr Shetty.
It will therefore take the trackers quite a while to build up their weighting in this company.
Source: Sky News