UAE: Bidders clarify position amid NMC Health pressures

Grant Boone
February 13, 2020

USA short-selling firm Muddy Waters, founded by American Carson Block, acquires a short position in NMC, criticizing the healthcare group's financial statements and wiping a third off the value of the company's share price.

NMC is the largest private healthcare company in the United Arab Emirates and operates a network of clinics and hospitals, specialized maternity and fertility clinics, and long-term care homes hospitals across 19 countries.

Shares in NMC have plummeted 70pc in the last two months after it was accused of financial mismanagement by hedge fund Muddy Waters.

U.S. global investment firm KKR has said it "has not made a proposal nor discussed with NMC the terms of any possible offer" and 'does not intend to make an offer for NMC, ' as reported in the Financial Times.

NMC, which dismissed Muddy Waters's previous comments as "baseless", did not respond to a request for comment.

On Monday, Muddy Waters had said: "Today's freakish 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". "As for the notion that NMC might receive private equity bids, it's hard for us to believe they would survive due diligence".

The company's operations continue to perform strongly, and the company expects to report full-year 2019 results in-line with management's expectations, it said. KKR declined to comment, while GK could not be reached. "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.

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Analysts at Align Research, who has an exposure in NMC, said it was not surprising the UAE-based firm - which was worth about 8.5 billion pounds at the share price peak in 2018 - has drawn takeover interest now that it's capitalized at just 1.6 billion pounds.

Chairman Bavaguthu Raghuram Shetty is conducting a legal review into the size of his stake, NMC said Monday.

Al Qebaisi and his relative Al Muhairi own a stake of about 24% in NMC.

Muddy Waters has also renewed its offensive against the firm, which owns British hospital operator Aspen Healthcare but makes most of its money in the Middle East.

On Feb. 4, Muddy Waters published a tweet asking if NMC's top shareholders aren't selling shares because of margin calls.

Although the NMC board said it is "urgently seeking clarity from each of these shareholders" to the number of shares they own or have used as collateral, it said the review would also affect the interests of the two Emirati shareholders.

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