NMC Health’s founder BR Shetty and fellow controlling shareholder Khalifa al-Muhairi have been forced to step back from the company’s board after revealing that their shareholdings have been reported incorrectly to the market.
The healthcare group said that non-executive chairman BR Shetty is carrying out a legal review to verify his stake in the group.
This, it said, suggests that the holdings of Mr Shetty and his two Emirati partners, Saeed al-Qebaisi and his relative Mr Muhairi, “have been incorrectly reported historically to the company and the market”.
Mr Shetty, co-chairman, and Mr Muhairi will “absent themselves from further board discussions until clarification of these matters”, it added, “pending a board decision about their ongoing roles as directors of the company”.
The company on Monday said it had received takeover interest from US buyout group KKR and Swiss-based GK Investment. The company said that “no proposal has been made by either and there have been no discussions as to the terms of any possible offer”. KKR declined to comment.
The company said that it had not been aware of a memorandum of understanding that led to a company owned by Mr Shetty holding shares on behalf of the other two controlling investors.
The board said it was “urgently seeking clarity from each of these shareholders” and “repeated its request for clarity” from each of the shareholders in relation to the number of shares owned by them that are pledged or used as security.
Shares in the group rose about 15 per cent on Monday in early London trading.
NMC said Mr Shetty’s BRS Ventures had been holding 20m shares for Messrs Qebaisi and Muhairi, pursuant to a memorandum of understanding from May 2017. Some of those shares were transferred to other banks and may have security attached to them.
If the legal review shows the shares belong to his Emirati partners, and not Mr Shetty, then he and his family’s holdings would be reduced by 9.6 per cent.
“Mr Shetty and his advisers are investigating the details of and the legal basis of these possible transfers and security arrangements,” the company said.
NMC was attacked by US short seller Muddy Waters in a report last December that raised questions over its finances and management. Before the report, Mr Shetty owned about 15 per cent as one of the three individuals who controlled NMC, alongside Mr Qebaisi with 17.4 per cent and Mr Muhairi with 15 per cent. Both have sold down their stakes in the past month, however, at a deep discount to cover debts linked to their stock.
The disclosure of incorrect reporting of shareholdings comes after a torrid two months for NMC, the healthcare group founded by Mr Shetty in 1975.
Shares are down 73 per cent since the December report. NMC, which denied the Muddy Waters claims, has appointed former FBI director Louis Freeh to investigate the allegations.
Mr Shetty has also seen the value of his other main business, Finablr, fall by 67 per cent over the same period. The financial services group has a similar shareholder base to NMC and its share price decline was aggravated by a ransomware attack on its Travelex currency business over the new year.
Additional reporting by Kaye Wiggins in London