NMC Health founder B.R. Shetty resigns as co-Chairman

Bavaguthu Raghuram Shetty, the founder and Chairman NMC Healthcare, and Chairman of UAE Exchange/Bloomberg

Abu Dhabi-based NMC Health, the hospital operator targeted by short-seller Muddy Waters, said that its founder Bavaguthu Raghuram Shetty has resigned amid investors’ concerns that he faced a margin call and misrepresented his stake.

Indian billionaire BR Shetty’s resignation as co-Chairman creates further uncertainty for the healthcare company, which has seen its shares collapse in the past few weeks on doubts about the shareholdings of its major investors.

The board of NMC Health is said to have asked for BR Shetty’s resignation, which takes effect immediately. The hospital operator has lost four board members since 16 February 2020, including Vice Chairman Khaleefa Butti, whose shareholding is also being probed.

In a tweet, Carson Block, the founder of Muddy Waters, said, “The share ownership and pledge debacle is a symptom of systemic rot and corruption at NMC Health.”

NMC Health operates the largest medical network in the UAE and in 2012 it became the first Abu Dhabi-based company to list in London Stock Exchange. The company’s shares started teetering in mid-December 2019 when Muddy Waters alleged that NMC Health manipulated its balance sheet and inflated the prices of companies it acquired.

Similarly, NMC said that it's Chief Investment Officer Hani Buttikhi and board member Abdulrahman Basaddiq also stepped down because they were appointees of the principal shareholders, adding that they had no knowledge of the share transfers.

Questions remain over the role of Shetty’s family at the company, his wife and son-in-law both hold roles in senior management.

The review is due to be completed before the company issues its financial results in March 2020.

Last week, NMC said that it had received buyout interest from Italian-backed GKSD Investment Holding and US-based KKR & Co. GKSD subsequently confirmed it could bid for the hospital operator but KKR said that it would not.

Additionally, Kohlberg Kravis Roberts & Co. announced it does not plan an offer after NMC said the private-equity firm made an approach.