Italian investor seeks partner to bid for troubled NMC Health

An investment company linked to Italy’s largest private hospital operator is seeking a partner to bid for NMC Health Plc, the Middle Eastern health-care company being investigated by the UK’s financial regulator over fraud allegations, according to people with knowledge of the matter.

GKSD Investment Holding SA approached Mubadala Investment Co. about becoming an equity partner, the people said, asking not to be identified as the matter is private.

The news comes as NMC asked lenders for a reprieve on its debt and Moody’s Investors Service slashed its rating by five levels, saying its financial statements can’t be relied on.

NMC, which runs the largest private health-care network in the United Arab Emirates, has been in freefall since short seller Carson Block said in December the company had overpaid for assets, inflated cash balances and understated debt.

The UK’s Financial Conduct Authority opened an investigation into the company last week. NMC has said the allegations are baseless, but in January hired former FBI Director Louis Freeh to investigate. Since then, the chief executive officer was fired and five of 11 board members have left their positions.

GKSD said in February that it was in preliminary stages of considering an offer for NMC.

GKSD, which is backed by investors of Gruppo Ospedaliero San Donato SpA, has until March 9 to make a formal bid under UK takeover rules.

Bankers representing GKSD have met officials from the Abu Dhabi sovereign wealth fund at least three times to discuss a possible deal and the most recent meeting was in the past two weeks, the people said.

Having a local partner such as Mubadala or another investor would help the group navigate the complex issues surrounding Abu Dhabi-based NMC, the people said. No final decisions have been made and GKSD may decide against a deal, they said.

Separately, Mubadala is also exploring its own potential investment in NMC, people with knowledge of the matter said last week. Representatives for San Donato and Mubadala declined to comment.

Abu Dhabi is keen to support the company to prevent further damage to the emirate’s image as a key regional hub for business, some of the people said, asking not to be identified because the talks are private. NMC is also strategic to the region’s nascent health-care industry, they said.

San Donato, which was founded by Italy’s Rotelli family, also has an alliance with NMC founder Bavaguthu Raghuram Shetty’s BRS Ventures Investment. The company operates hospitals in 44 locations with more than 5,000 beds around Italy and treats more than 4.7 million patients each year, according to its website.