TAKEOVER BATTLE ON THE HORIZON ?6 Feb 2020 07:11
The founder of NMC Health is looking to buy out his Emirati partners and return to an "active leadership position" at the embattled hospital group, according to people briefed on his plans.The 77-year-old Indian-born entrepreneur BR Shetty is conducting an operational review of NMC ahead of formal talks with shareholders and regulators, these people said.Shares in NMC, which owns and operates hospitals in the Middle East, have fallen more than 60 per cent since short-seller Muddy Waters last year questioned its asset values, cash balance and debt levels. The claims have been rejected by NMC, which has appointed former FBI director Louis Freeh to carry out an investigation into the allegations.Mr Shetty stepped down as NMC's chief executive in 2017 but remains the largest shareholder. On top of the NMC share price decline, he has also been hit by a sharp decline in the value of his other main business, financial services group Finablr, which has fallen more than 60 per cent in the past few weeks.One person briefed on Mr Shetty's strategy said the businessman had made the Abu Dhabi government aware of a potential plan that would see him partner with new investors to buy the shares owned by Emirati investors Saeed al-Qebaisi and his relative Khalifa al-Muhairi, who control a stake of about 24 per cent in NMC.Last month the pair sold £375m of their shares to repay debt owed to Deutsche Bank and Credit Suisse to meet margin calls as the stock price collapsed, reducing their stake in the company.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."Private equity firms, including Apollo, have previously considered taking a stake in NMC, according to two people familiar with the situation. Apollo declined to comment.Bankers are sceptical about Mr Shetty's ability to fund any transaction, saying he would need financing to raise his stake in the FTSE 100 company he founded in 1975.Finablr was affected by the Muddy Waters attack given it has a similar shareholder base to NMC. Its Travelex currency business was also the target of a cyber attack that forced it to shut down over the new year. Finablr came under further pressure last month when it disclosed that more than half of its stock had been used as security when buying the currency platform in 2015.But the people familiar with Mr Shetty's plans point out that he has retained his 15 per cent stake in the healthcare group throughout its recent crisis without having to sell any NMC shares.One of the people close to Mr Shetty said that the company should strengthen its corporate governance procedures depending on the outcome of the independent investigation carried out by Mr Freeh."If there are lapses, it is important that we work together with other shareholders to remedy any such governance failings," the person said.