Abu Dhabi billionaire BR Shetty’s NMC Health says short seller attack is “baseless”

The company’s shares lost about a third of their value on Tuesday after the Muddy Waters report

NMC Health Plc said claims made by Carson Block’s Muddy Waters Capital “appear principally unfounded,” after a report by the short seller sent shares tumbling the most on record on Tuesday.

“NMC will review the assertions, insinuations and accusations made in the report, which appear principally unfounded, baseless and misleading, containing many errors of fact, and will respond in detail in due course,” the company said in a statement Wednesday. The stock gained 9.8 per cent at the open.

It also reaffirmed 2019 and 2020 forecasts provided in October and, in a separate statement, said it will start a share buyback program of as much as $200m on Wednesday.

The shares lost about a third of their value on Tuesday after Muddy Waters said that the hospital operator’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt. The company said in Wednesday’s statement that it “has a track record of significant, open and increasingly detailed disclosure to the market, as monitored and reviewed by its entirely independent disclosure committee.”

Before Tuesday’s report, NMC’s shares had gained more than twelve-fold since listing in 2012. They peaked last year after joining a select group of companies in the Arab world worth more than $10bn.

Financial services company Finablr Plc said Wednesday it remains on track to achieve the guidance it set out at its initial public offering.

Shares in the company, which listed in May, fell 11 per cent on Tuesday. Both NMC Health and Finablr were founded by Abu Dhabi-based billionaire Bavaguthu Raghuram Shetty.

Analysts are overwhelmingly bullish on NMC Health, with 12 firms tracked by Bloomberg rating the stock buy or an equivalent. The stock has no hold ratings and Jefferies analyst James Vane-Tempest is the lone bear with an underperform rating.

Muddy Waters didn’t disclose the size of its short position in NMC Health in the report. Short sellers seek to benefit from a decline in a company’s share price.