Carson Block’s investment firm, Muddy Waters issued a report criticising NMC Healthcare’s accounts and disclosed a short position of Indian origin billionaire businessman Bavaguthu Raghuram Shetty who is the founder of NMC Healthcare and Finablr.
Crux of the Matter
B.R Shetty, once a typical jet-setting, cash-blowing billionaire with private jets, vintage cars and condos in Burj Khalifa, resigned as NMC’s chairman on February 16. On December 10, his stocks were valued at $2.4bn but only a week later Carson Block came along with the damning report. Muddy Waters’ report brought forward the firms’ complex share arrangements which cast doubts on Shetty’s net worth. BRS Ventures Investment which holds most of Shetty’s assets does not report consolidated financials, preventing a complete analysis of his net worth. Shetty’s holdings in Finablr and NMC are worth $885mn, but it now might be reduced to just a fraction of that depending on his borrowings. Muddy Waters report hints at potential overpayment for assets, inflated cash balances and understated debt. On Shetty’s request, the law firm Herbert Smith Freehills launched a review of Shetty’s holdings. According to Shetty’s filings of this month revealed that he had pledged a quarter of his NMC stake against loans with First Abu Dhabi Bank and Zurich-based Falcon Private Bank. Also, two other shareholders may own half his stake. Another lender Al Salam Bank Bahrain already sold some of the shares to enforce security over a loan and on February 18 NMC said that First Abu Dhabi Bank sold another chunk earlier this month. Complicating the matter, Shetty pledged a batch of NMC stock in 2018 as part of an equity collar arrangement with Goldman Sachs that uses options to limit the effect from share moves. In January 2020 he also pledged most of his stake in Finablr to refinance a loan from the company’s takeover of foreign-exchange firm Travelex for about $1.2bn.
I didn’t anticipate NMC’s shareholding drama. I wouldn’t have been able to predict that we’d get these bizarre disclosures about unclear share ownership coming out of the company. – Carson Block
NMC disputing claims made by Muddy Waters, have hired former FBI director Louis Freeh to conduct an independent review of the short-sellers allegations. Shetty’s other assets which include a catering company, a waste-management firm and pharmaceutical business Neopharma were in the early stages of planning for an initial public offering (IPO).
Curiopedia
Bavaguthu Raghuram Shetty is an Indian-born billionaire businessman and the founder of a number of companies like Finablr and BRS Ventures based in the United Arab Emirates. He is founder and chairman of Abu Dhabi-based NMC Healthcare, and chairman of UAE Exchange. He immigrated to the UAE in 1973. After working as the country’s first medical representative, he founded New Medical Centre Health (NMC) in 1975 to fill the need for personalized, cost-effective healthcare accessible to all. NMC is now the largest private healthcare provider in the UAE with over four million patients annually across 45 facilities spread over 12 cities and 8 countries. More Info
Carson Block is a short-seller and the founder of Muddy Waters Research. Block is known for documenting and alleging fraudulent accounting practices in publicly traded Chinese companies. He holds a law degree from Chicago-Kent College of Law. In 2011, he was ranked as a 50 Most Influential Thinker by Bloomberg Markets. More Info
Muddy Waters Research LLC is a privately held due diligence based investment firm that conducts investigative research on public companies while also taking investment positions that reflect their research. The firm has exposed accounting problems and fraud at several companies, primarily in China but also in other countries in Asia, Europe and North America. The firm is best known for spotting fraud at Sino-Forest Corp, a Canadian-listed Chinese company whose stock fell 74% before it eventually filed for bankruptcy protection in March 2012. In January 2015, the firm raised an initial $100 million for its investment strategy. More Info
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