Private healthcare group NMC exits administration after two years
NMC came out of administration on Friday, ending two years of uncertainty after debts racked up in an alleged fraud threatened to destroy the United Arab Emirates’ largest private healthcare group.
The scandal at NMC left creditors with large outstanding debts. The company collapsed in 2020 after revealing more than $4bn in previously undisclosed liabilities across NMC and other businesses founded by Indian entrepreneur BR Shetty.
A new NMC group, NMC OpCo Ltd, has been formed from 34 of the 36 companies that were subject to the administration proceedings under the courts of Abu Dhabi’s international financial centre, allowing the healthcare operations to continue to trade normally.
“This is a new beginning for the organisation. The companies are on a very stable footing,” Michael Davis, chief executive, told the Financial Times. “We are focused on growth — there is an upside we see.”
The group is now planning to expand its hospitals and clinics, build new revenue streams and find cost efficiencies.
In 2021, NMC recorded gross revenue of 4.51bn UAE dirhams ($1.23bn) and ebitda of Dh755mn, with a strong performance from its cosmetic surgery and fertility hospitals.
The UK’s NMC Healthcare PLC and UAE-registered NMC Healthcare Ltd will remain in administration, allowing Alvarez & Marsal to continue its investigation and pursue potential avenues to recover funds for creditors.
Shetty has launched legal proceedings in the US against the former management, auditor EY and two banks, claiming they participated in a complex $5bn fraud. EY denies any wrongdoing.
NMC’s lenders have been provided with a new $2.25bn facility under the restructuring to settle their previous debt claims.
They have selected seven new directors, most of whom represent companies that provided new capital to help keep the business afloat and enable it to launch a three-year growth plan, including divestments.
The company said its new board would help “embed a robust governance framework”.
The new chair, Kevin Taylor, group treasurer of Abu Dhabi Commercial Bank, is one of three directors appointed by ADCB, which had an exposure of around $1bn and placed NMC into administration in April 2020.
This week, NMC sold its stake in a Saudi joint venture to refocus on its core markets, said Davis.
“Saudi Arabia is not an easy place to work,” he said. “I love Saudi, but in looking at what is best for NMC and to ensure the greatest return to stakeholders, we needed to focus just on the UAE and Oman.”