Abu Dhabi, UAETuesday 22 September 2020

KKR and GK Investment prepare bids for under-fire NMC Health

The healthcare company founded by Indian businessman BR Shetty said it had been 'incorrectly' informed about holdings of significant shareholders

An NMC Speciality Hospital in the UAE. The company's administrators have appointed a new board whose priority will be to "implement corporate governance changes" at the UAE's biggest healthcare operator. Reuters
An NMC Speciality Hospital in the UAE. The company's administrators have appointed a new board whose priority will be to "implement corporate governance changes" at the UAE's biggest healthcare operator. Reuters

A number of suitors are lining up with potential offers for embattled NMC Health, founded by Indian billionaire BR Shetty.

In a regulatory filing to the London Stock Exchange on Monday, the company disclosed it received "highly preliminary approaches" from private equity firm Kohlberg Kravis Roberts and Kamel Ghibri's GK Investment Holding about a possible offer for the company, as it also disclosed a number of its major shareholders had misinformed the company about the level of their ownership.

"No proposal has been made by either potential offerer and there have been no discussions as to the terms of any possible offer. There can be no certainty that any offer will be made for the company," NMC Health said in a statement to the LSE, where its shares trade.

NMC Health owns and manages more than 200 healthcare facilities, including hospitals, medical centres, day surgery centres and home health clinics across the UAE, UK and Europe. It treats more than 8.5 million patients a year, according to its website.

The company's shares have been under pressure since a report was issued by US short seller Muddy Waters in mid-December. The company's share price dropped 73 per cent to £7.00 by the end of last week from £25.85 prior on December 16 — the day prior to the Muddy Waters report being published. However, its shares jumped 14 per cent in early trading in London on Monday to £7.99 on news of the potential bids.


In a separate statement to the market on Monday, the company said holdings by three of its significant shareholders, including its joint non-executive chairman, Dr BR Shetty, had been "incorrectly reported historically to the company and the market".

NMC Health said a review being carried out by Dr Shetty to verify holdings by him and companies related to him also had implications for fellow shareholders Saeed Al Qebaisi and Khaleefa Al Muhairi.

Some 4.8 million shares held in a nominee account at Falcon Bank by Dr Shetty had been transferred to First Abu Dhabi Bank "in connection with security arrangements given by Dr BR Shetty in favour of First Abu Dhabi Bank".

It also said just over 5.1 million shares held in Dr Shetty's name subject to a share pledge made to Falcon Private Bank and that 20 million shares shares held by one of Dr Shetty's companies, BRS International Holding, could ultimately be held by Mr Al Muhairi and Mr Al Qubaisi. This would reduce the amount of shares publicly held by Dr Shetty by 9.58 per cent.

Of those 20 million shares, 6.5 million have been transferred from a company nominee account to Al Salam Bank in Bahrain and may be subject to security restrictions. A further 2.6 million shares have been transferred to United Arab Bank and could also be subject to claims.

NMC Health said it has been informed that "the matters above are subject to further investigation, including of certain documents and records held by third parties, as part of Dr B. R. Shetty's ongoing legal review".

It added that Dr Shetty and his advisers "are investigating the details of and the legal basis for these possible transfers and security arrangements".

The company said its reporting of shareholder levels to the market "has been based on notifications received from the shareholders" and that it is "urgently seeking clarity" from each person as to how many shares owned by them are pledged or used as security against loans or other form of financial instrument that third parties can sell without their approval.

On January 18 NMC Health said it appointed former Federal Bureau of Investigation director Louis Freeh and his risk management firm Freeh Group International Solutions to look into some of the allegations that had been made by Muddy Waters in its report. The short-seller had said in its December report that NMC Health had inflated cash balances, overpaid for its assets and understated its debt.

The short seller argued the firm's profits were "too good to be true", especially when compared to similar listed companies operating in the same sector. The company called the allegations "unfounded, baseless and misleading".

In 2019, NMC reported lower net profit for the first half of the year of $138.1 million (Dh506.8m) while revenue climbed 33 per cent year-on-year to $1.24 billion.

Updated: February 10, 2020 08:39 PM

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