Arab News, Sunday, Aug 30, 2020 | Muharram 11, 1442
NMC ‘wants to exit Saudi venture’
Saudi Arabia: Administrators to NMC Health, the fraud-stricken UAE-based
hospitals company, are looking for buyers of its Saudi Arabian business launched
last year.
Alvarez & Marsal, the firm appointed to oversee the future of NMC assets
following its collapse with a total of $6.6 billion of debts, told creditors in
a recent presentation that the Saudi business and some other international
operations were regarded as “non-core,” and that it was examining options to
sell.
The Saudi operation was formally launched last year in a joint venture with the
Kingdom’s General Organization for Social Insurance that involved a swap of
assets and cash. The venture is currently held via the Tadawul-listed company
CARE.
The administrators told creditors that they were looking to exit the joint
venture to raise cash as part of the restructuring of NMC.
The presentation said: “The recommendation is to explore the potential of
engaging with GOSI (the General Organization for Social Insurance) for the
purchase of the company’s interest and/or a capital markets solution, such as
reversing the Saudi joint venture into CARE.
“However, any decision would have to be considered in light of the potential
underlying value of the business, especially as NMC is not a forced seller of
the business,” it added.
A spokesman for NMC confirmed that it was looking to exit the Saudi joint
venture, but said that discussions with potential buyers had not begun.
Among NMC assets is a 53 percent stake in Saudi Medical Care Group, which in
turn owns 49 percent of CARE, giving NMC an effective interest of 26 percent in
the Tadawul-listed company.
NMC’s Saudi ventures so far have avoided any taint from the damaging revelations
about NMC, which is facing regulatory and legal actions in several jurisdictions
as investigators seek to piece together what happened to more than $4 billion of
unauthorized bank lending that forced the downfall of the once
multibillion-dollar company.
Marija Simovic, Alvarez managing director, said last week that the firm had
uncovered “most” of the hidden debts that led to its collapse.
“Do we believe a majority of it has been identified? Yes. Is it 100 percent?
No,” she told Bloomberg.
Teams of investigators from the UK, where NMC was listed on the London Stock
Exchange, as well as in the UAE and other jurisdictions, are investigating
financial records of NMC to trace the missing funds.
As part of the creditors’ presentation, Alvarez gave a verbal update on the
forensic investigations into illegal bank borrowings, which has not been made
public.
Analysts at investment bank Arqaam Capital said the decision by NMC to exit the
joint venture could lead to takeover interest in CARE, listed on the Tadawul
with a market capitalization of SR2.3 billion ($613.3 million), and named Saudi
health groups Al-Hammad Medical and Mouwasat Medical Services as potential
buyers.
CARE has a resilient balance sheet, with ample cash and low borrowings, and a
“healthy growth profile,” Arqaam said.
NMC, the UAE’s leading health care provider, was founded in the 1970s by Indian
entrepreneur BR Shetty and run before its collapse by CEO Prasanth Manghat.