Alkhair Capital of Dubai Initiates $100 Million HealthTech Investment Fund

05 Sep, 2023

Alkhair Capital of Dubai Initiates $100 Million HealthTech Investment Fund

Alkhair Capital, a prominent player in the asset management and investment banking sphere, has unveiled a substantial $100 million fund dedicated to investing in cutting-edge healthcare technology ventures. This strategic move is aimed at enriching the company's investment portfolio.

The fund, domiciled in the Dubai International Financial Centre and adhering to Sharia-compliant principles, is set to target companies at the forefront of healthcare innovation, particularly those harnessing advanced artificial intelligence to bolster healthcare providers. It is structured as an open-ended fund, with its primary objective being the injection of liquidity into targeted companies to foster their growth.

The healthcare sector is currently experiencing a notable surge in growth driven by various factors, including an expanding senior citizen population, rising life expectancy, and an increase in lifestyle-related diseases. However, this growth has brought forth considerable challenges, including inadequate infrastructure, higher medical claim settlements, and liquidity constraints arising from prolonged working capital cycles.

The newly established investment fund is poised to play a pivotal role in mitigating these liquidity challenges, which have been hindering the profitability and expansion of medical facilities. According to Naveed Aurakzai, Chief Executive of Alkhair Capital Dubai, the healthcare sector faces significant hurdles, including the processing of $1.2 billion in medical claims and a lengthy average delay of 112 days for healthcare facilities to receive 90 percent of their payments from insurance companies.

The fund's primary aim is to address these formidable challenges within the healthcare sector, which are estimated to involve expenditures of approximately $100 billion within the Gulf Cooperation Council (GCC) region.

The healthcare sector in the GCC and the wider Middle East and North Africa (MENA) region has witnessed substantial growth and transformation in recent years, largely catalyzed by the COVID-19 pandemic and the subsequent influx of investments into the industry.

Reforms initiated by regional governments, particularly in the six-member economic bloc of GCC, such as mandatory health insurance, have played a pivotal role in fostering the sector's growth. A report by Dubai-based Alpen earlier this year projected that current expenditures in the GCC will reach $135.5 billion by 2027, growing at an annual rate of 5.4 percent from 2022. Additionally, healthcare expenditure as a percentage of gross domestic product in the region is expected to increase from 5 percent in 2022 to 5.8 percent in 2027.

Globally, funding for health tech companies reached $29.1 billion across 729 deals in 2021, with an average deal size of $39.9 million, as reported by Deloitte. This market is anticipated to continue its growth trajectory in the coming years, with research and development attracting significant investment, followed by on-demand healthcare and disease treatment.

In an effort to proactively manage its investments and align with the objectives of the new fund, Alkhair Capital has joined forces with Klaim Technologies, a FinTech company specializing in AI-powered solutions for assessing insurance claims. The partnership aims to optimize and expedite the claims process, ensuring prompt payments to medical facilities.

Alkhair Capital, renowned for its asset management and investment banking services, including debt and equity capital market transactions, mergers and acquisitions advisory, and more, initiated its operations in Saudi Arabia in 2009. The company further expanded its presence by establishing its DIFC office in 2014, offering custody services for clients involved in stock markets in Saudi Arabia and the UAE. Alkhair Capital manages a diverse range of funds, including the Alkhair Capital Sukuk Plus Fund, Alkhair Murabaha Fund, Saudi Equity Fund, and Alkhair Capital IPOs Fund.