Under Pressure: Why is the UAE’s Largest Private Healthcare Provider Making Headlines?
NMC Health, one of the UAE’s largest healthcare chains, is struggling with a crisis after a number of the Gulf nation’s major banks called for it to be put into administration in light of a disclosed exposure of USD 2 billion.
Shares in the Dubai Islamic Bank PJSC ended limit down after it revealed that it has USD 541 million of exposure to NMC, which put the lender at risk of losing half of its annual profit. On the other hand, the Abu Dhabi Islamic Bank PJSC was put in a similar situation closing down by the maximum allowed, after a USD 291.4 million extension was revealed to have been provided to NMC Health.
The story came into the international spotlight when Abu Dhabi Commercial Bank PJSC applied to the UK’s High Court to appoint administrators for the London stock exchange-listed company. It is worth mentioning that shares in the bank slumped after filing the application.
NMC Health was founded by Indian Billionaire BR Shetty in 1974 and over the years grew to become one of the Middle East’s largest healthcare providers. In fact, in the UAE alone, it is the biggest private healthcare group.
In 2017, NMC Health had more than 200 hospitals and clinics in 19 countries earning it a spot in the prestigious FTSE 100. The following year the company’s market value grew to USD 10 billion.
Last year, however, the company was put under scrutiny when reports of fraud started to surface; according to BBC, U.S.-based activist investor Muddy Waters alleged that NMC Health had inflated its balances, overpaid for assets, and understated its debt. Ripples of the report saw stocks plunge before the company was suspended from trading. Further digging into the matter revealed that NMC Health failed to report USD 4 billion in debt; in the aftermath of the crisis, the company lost its elite FTSE 100 status and its senior staff members resigned.
Now, with a market value of USD 2.4 billion and total debt of USD 6.6 billion, NMC now faces an investigation by the U.K.’s Financial Conduct Authority.
As for the administration application filed by the Abu Dhabi Commercial Bank, NMC Healthcare rejected it, with its Executive Chairman Faisal Belhoul stating: “ADCB is putting its own interests above not only other creditors but also the health and safety of U.A.E. residents amid an escalating pandemic.”
Behloul released another statement asking lenders for a standstill on debt repayment to give the healthcare provider time to prepare a recovery plan.
The scandal has rocked UAE business circuits with the shock wave going as far as the country’s central bank. Last week, Mubarak Al-Mansoori, who has been the governor since 2014, was ousted in favor of Abdelhamid Saeed, previously in charge of the First Abu Dhabi Bank PJSC.
