Monday 10 February 2020 10:45 am

Investment firms circle for embattled NMC Health

Shares in embattled hospital operator NMC Health rose 32.31 per cent today after the firm received a multiple approaches regarding a potential takeover from investment firms including KKR.

The group, which runs hospitals in the Middle East, said that the offers were “highly preliminary” and that there could be “no certainty that any offer will be made” for the firm.

Read more: NMC Health hires former FBI director to probe short attack allegations

NMC, which has seen its share value fall 60 per cent since short-seller Muddy Waters launched an attack on the value of the firm’s assets last year, was one of the FTSE’s worst performing stocks last year.

The group has appointed former FBI director Louis Freeh to look into allegations of financial wrongdoing by the company made by US short-seller Muddy Waters. 

The firms must now declare a “firm intention” to make an offer for NMC by close of business on 9 March.

Russ Mould, investment director at AJ Bell, said: “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.

“Concerns have been flagged in various parts of the market before these events happened, with critics saying the company had grown too fast and that acquisitions were masking poor organic growth.

“There were a lot of questions about corporate governance, opaque accounting and supply chain finance.”

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The takeover interest came as it was also announced that the board has opened a review into the firm’s reporting of chairman Bavaguthu Shetty’s shares in the business.

The review suggests that NMC has failed to report his 15 per cent stake in the company accurately.

Shetty has been suspended “until clarification of these matters and pending a board decision about their ongoing roles as directors of the company”.

The firm said it was unaware of a memorandum of understanding that led to one of Shetty’s other companies holding shares on behalf of the two other controlling investors.

Last week it was reported that Shetty, who stepped down as the firm’s chief executive in 2017, was planning to buy out his partners and return to an “active leadership position” at the company.

Shetty, who also owns financial services platform Finablr, which has also seen its value fall in recent weeks due to problems at Travelex, is looking to bring in new investors to buy out shares owned by Emirati investors Saeed al-Qebaisi and his relative Khalifa al-Muhairi, who control 24 per cent of the firm.

Read more: NMC Health stocks fall after $490m sell off flagged by major shareholders

The two have already sold £375m of their shares in the firm to repay debt to creditors Deutsche Bank and Credit Suisse.

A spokesman for Mr Muhairi, who is executive chairman at NMC, said: “Khalifa remains committed to the financial success of NMC as a business. Given the ongoing investigation he is unable to comment at this time.”

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