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NMC Health reveals KKR, GK approaches as founder Shetty steps back

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02/10/2020 | 04:31pm EDT

NMC Health Plc disclosed preliminary buyout approaches from private equity firms KKR & Co Inc and GK Investment on Monday, lifting its shares, which have dropped dramatically since Muddy Waters last year queried its financial statements.

The largest private healthcare company in the United Arab Emirates said separately that its co-chair and founder BR Shetty had stepped back from its board after he informed NMC of potentially inaccurate reporting of his holdings.

Commenting on the healthcare company's disclosure that its co-chairman's stake was under legal review, Britain's markets watchdog said it is "making enquiries" from NMC.

"We are aware of the situation and are making enquiries with the relevant parties", a Financial Conduct Authority (FCA) spokesman said in a statement.

Shetty was not immediately available for comment on the NMC statement, which said the company was investigating.

NMC, which joined the London Stock Exchange in 2012 and was promoted to the blue chip FTSE 100 index in 2017, operates clinics and hospitals, specialized maternity and fertility clinics, and long-term care homes hospitals across 19 countries.

But it has lost more than two-thirds of its value since U.S.-based short-seller Muddy Waters questioned its financial statements in December, prompting major shareholders to sell out.

"Today's bizarre disclosures about even more pledges and debt validate that the cockroach theory is alive and well - what we found is likely just the tip of the iceberg," Muddy Waters' Carson Block said in a statement.

"As for the notion that NMC might receive private equity bids, it's hard for us to believe they would survive due diligence," he added.

NMC declined to comment on the short-seller's statement.

However, earlier NMC said: "The Company's operations continue to perform strongly, and the Company expects to report full-year 2019 results in-line with management's expectations."

Former FBI boss Louis Freeh is leading a separate independent review committee appointed by London-listed NMC to investigate the Muddy Waters allegations.

NMC said it has not had talks on the terms of any potential offer. KKR declined to comment, while GK could not be reached.

"Just when you thought it couldn't get any stranger with NMC Health, there are two new twists in the tale of the troubled hospital operator...Taking the business private might be the best thing to happen to NMC as it has lost credibility with the market and it will take a lot to rebuild trust with investors," Russ Mould, investment director at AJ Bell, said.

NMC shares were up 6.7% at 747.2 pence at 1327 GMT.

SHETTY HOLDINGS

NMC said the ongoing review into inaccurate disclosures in the past would also affect the interests of two other major NMC shareholders, vice-chair Khaleefa Al Muhairi and Saeed Al Qebaisi.

Based on the initial probe, the Indian billionaire' s stake in NMC will likely come down by 9.58%, NMC said. A spokesman for NMC declined further comment.

Shetty owned 19.22% stake as of May last year, while NMC vice-chair Muhairi and Qebaisi had 15.82% and 7.66%, respectively, as of Jan. 28, Refinitiv data showed.

Muhairi and Qebaisi also sold some shares in NMC and Finablr last month. The payments firm is also co-chaired by Shetty.

Finablr on Monday said that independent directors were reviewing arrangements between Shetty and the two shareholders and it could impact its shareholding structure.

Shetty had pledged over half of Finablr's stock as security against debts it incurred in buying Travelex, the company disclosed last month. He owned nearly 63% of Finablr as of August.

Finablr shares, also hit by the Muddy Waters allegations against NMC, were up 7.7% at 77.05 pence.

By Pushkala Aripaka, Iain Withers and Saeed Azhar

Stocks mentioned in the article
ChangeLast1st jan.
AJ BELL PLC 11.03% 297 Delayed Quote.-37.65%
FINABLR PLC -5.20% 11.025 Delayed Quote.-93.53%
KKR & CO. INC. 1.68% 24.8 Delayed Quote.-16.49%
LONDON STOCK EXCHANGE PLC 1.64% 7156 Delayed Quote.-8.85%
NMC HEALTH PLC -0.17% 938.4 Delayed Quote.-46.89%
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