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Thirty-four companies that are part of NMC Healthcare, one of the UAE's largest hospital operators, have exited administration and have become subsidiaries of a new group after the company's creditors approved a restructuring plan last year.
These companies completed a “deed of company arrangement” (DOCA) restructuring process under the Abu Dhabi Global Market (ADGM) and left administration on March 25, 2022, NMC said in a statement on Friday.
However, both UK-registered NMC Healthcare and UAE-registered NMC Healthcare will remain in administration until their restructuring and legal issues are resolved.
“Today, we exit administration with a renewed sense of purpose, a clear direction, a strong focus on who we are here to serve and an unwavering commitment to driving the future growth of NMC, strengthened by the support of creditors and a new, highly qualified and cohesive board of directors,” said Michael Davis, chief executive of NMC.
“We emerge today stronger, more resolute and resilient than ever and ready to chart our new path.”
The move partially marks an end to NMC's woes, which began after a 2019 report by short seller Muddy Waters accused the company of inflating its assets and understating its debt.
An independent investigation uncovered more than $4.4 billion of previously unreported debt, leading to the company being placed into administration in April 2020.
NMC said earlier this year it is pressing ahead with a restructuring after 95 per cent of its creditors approved its plan to reduce its debt pile to $2.25bn. The DOCA also involves a mechanism that allows creditors to exit and generate more funds than the sale of distressed assets may yield.
Operations of all NMC companies will continue as normal and there will be no disruption to the continued trading of the NMC Group, the joint administrators said in a separate statement.
“There were moments over the past two years where it was uncertain if NMC would survive, so to be able to hand over 34 companies to a New NMC Group under creditor ownership, as thriving healthcare businesses, is a remarkable achievement,” said Richard Fleming, managing director of Alvarez & Marsal Europe and joint administrator of NMC Health and NMC Healthcare.
The companies that exited administration will be subsidiaries of the NMC Group that will be overseen by a newly appointed board of directors, the company said. The new group will operate under ADGM’s jurisdiction.
There were moments over the past two years where it was uncertain if NMC would survive, so to be able to hand over 34 companies to a New NMC Group under creditor ownership, as thriving healthcare businesses, is a remarkable achievement
Richard Fleming,
managing director of Alvarez & Marsal Europe and joint administrator of NMC Health and NMC Healthcare
Abu Dhabi Commercial Bank, which had the most exposure among lenders to NMC liabilities, said it had appointed three of the seven new board members in the healthcare company.
Kevin Taylor, group treasurer at ADCB, becomes chairman of the board and Jean-Marc Le Jeune and Bassem Itani have been appointed as non-executive directors, the lender said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.
ADCB, which is exposed to NMC debt worth $981 million, also said it had received 37.5 per cent of transferable exit instruments in a $2.25bn facility issued by the new NMC holding company following the exit from administration.
“Holders in NMC’s exit instruments will ultimately be repaid following monetisation of the business at a later stage. Participants will benefit from any further value creation at the NMC business,” the bank said.
NMC has more than 12,000 employees and owns 65 healthcare facilities with more than 1,400 hospital beds as well as 38 pharmacies.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
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