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* Muddy Waters criticises NMC's financial statements
* NMC shares fall more than 35%
* Finablr, which shares a founder with NMC, also slumps
(Adds Finablr shares fall)
By Noor Zainab Hussain and Stanley Carvalho
Dec 17 (Reuters) - U.S. short-selling firm Muddy Waters said
on Tuesday it had acquired a short position in NMC Health Plc
, criticising the healthcare group's financial statements
and wiping more than a third off the value of the company's
share price.
The short seller questioned the value of the London-listed
firm's assets and cash balance, as well as its reported profits
and debts. Muddy Waters said in a research note that NMC's asset
purchase prices and capital expenditures were inflated.
NMC, which is based in the United Arab Emirates, declined to
comment. Britain's financial watchdog also declined to comment.
Shares in the healthcare provider, founded and co-chaired by
Bavaguthu Raghuram Shetty, plunged more than 35% to 1,674.5
pence, sliding to the bottom of London's bluechip index.
The stock was on track for its worst day ever.
NMC, with operations in 17 countries, reported net debt and
payables of $1.89 billion at the end of 2018. NMC said in
October it expected double-digit revenue and core earnings
growth in 2020.
Muddy Waters, known in financial markets for declaring short
equity positions on the basis of its in-house research, said
NMC's reported cash balances could be "materially overstated"
and said its margins were "too good to be true" relative to
UAE-focused publicly traded companies Mediclinic and
Aster DM Healthcare.
Shetty also founded Finablr, a London-listed
payments and foreign exchange company, whose shares lost almost
20% on Tuesday. As well as founding Finablr, Shetty is
co-chairman of the company, according to its website.
Finablr could not immediately be reached for comment.
Shetty did not respond to Reuters calls or requests sent to
him via his LinkedIn page for comment on the NMC and Finablr
share moves.
About 10% of NMC's outstanding shares were in short position
as of Dec. 13, according to FIS data. It was not immediately
clear how much of that short position was accounted for by Muddy
Waters, a company founded by American Carson Block.
Short sellers borrow shares and immediately sell them,
betting the price will fall. They then buy the shares back and
return them to the lender, aiming to pocket the capital gain.
Advocates say the practice puts a check on investor
over-confidence and corporate spin. Critics say it destabilises
markets because shortsellers have an interest in driving a
company's share price down.
Muddy Waters, which came to fame by betting against some
Chinese companies, took its first short position in a
London-listed company in August, when it bet against litigation
funder Burford Capital.
(Reporting by Noor Zainab Hussain in Bengaluru and Stanley
Carvalho in Abu Dhabi; Additional reporting by Pushkala Aripaka
and Yadarisa Shabong in Bengaluru, Kirstin Ridley in London;
Editing by Saumyadeb Chakrabarty and Edmund Blair)
