Abu Dhabi wealth fund weighs deal in Shetty’s troubled NMC

Abu Dhabi wealth fund Mubadala Investment Co. is considering a potential investment in NMC Health – a sign the emirate is keen to address the worsening crisis at the troubled hospital operator, people familiar with the matter said.

Mubadala has held early discussions to look at a range of options regarding the Middle East’s largest health care provider, including buying a stake and taking a board seat, the people said, asking not to be identified as the matter is private.

While discussions are ongoing, there can be no guarantee of a transaction given the complex issues facing the company, the people said. Representatives for Mubadala and NMC declined to comment.

The potential deal comes as NMC faces allegations by Carson Block’s Muddy Waters Capital LLC that its financial statements hint at potential over payment for assets, inflated cash balances and understated debt. The company has said the allegations are baseless, but in January hired former FBI Director Louis Freeh to investigate.

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Mubadala is also seeking to expand into health care as part of Abu Dhabi’s efforts to diversify its economy by turning oil revenue into profitable investments.

The fund is in talks to buy Jadwa Investment Co.’s health-care assets in the United Arab Emirates, people familiar with knowledge of the matter said last month.

Aside from Mubadala, investors linked to Italian hospital operator Gruppo Ospedaliero San Donato Spa have said they’re studying a possible offer for the company and are working with financial advisers.

KKR & Co has said it’s not making an offer for the business after NMC said it received an approach from the buyout firm.

The UK’s Financial Conduct Authority last week opened an investigation into NMC after the company fired its chief executive officer Prasanth Manghat and revealed financial discrepancies.

The company’s stock price has been on a free-fall following the Muddy Waters report. It was suspended from trading on Thursday as the company sought to provide “clarity to the market as to its financial position.”

NMC was founded by Indian entrepreneur Bavaguthu Raghuram Shetty in 1975.

Before the Muddy Waters report, NMC’s shares, part of the FTSE 100 Index, had risen more than 12-fold since listing in London eight years ago.

They peaked in 2018 after joining a select group of companies in the Arab world worth more than $10bn.