Independent review a shot in the arm for NMC Health shares

SHARES in hospital operator NMC Health surged after it launched an independent review into allegations of financial mismanagement made by a short-seller.

NMC suffered a major sell-off last week, with its shares losing nearly half their value, after hedge fund Muddy Waters launched an attack on the group, accusing it of understating debt levels by around $320m (£242m).

In a statement yesterday it said that a “leading accounting firm” would undertake the inquiry, which will be overseen by an independent board, to “review the assertions made by certain third parties”.

Shares in the United Arab Emirates-based company – the smallest constituent of the FTSE 100 – soared by 479p, or 37pc, to £17.80.

Founded by Indian pharmacist Bavaguthu Raghuram Shetty, who remains its chairman, NMC is the largest private healthcare provider in the UAE. Its board said it was “disappointed with the material and, we believe, unwarranted share price reaction”.

It added: “We are confident that this review, when complete, will be entirely confirmatory of the disclosures provided by the company to date. We will also be progressing relevant legal and regulatory options following the actions taken by third parties to mislead the market and manipulate the share price.”

Muddy Waters – which has taken a short position in NMC’S shares, meaning it would have profited from a fall in their price – said it had “serious doubts” over the group’s finances and questioned its relationship with auditor EY.

Responding to the announcement, Muddy Waters questioned the value of an inquiry.

“The unfortunate history of such reviews is that they are usually exercises in whitewashing that provide little to no transparency or accountability,” it said.

The furore has knocked the shares of Finablr, which was also founded by Mr Shetty. Shares in the FTSE 250 payments firm rose more than 4pc, or 7.3p, to 175.5p. The Shetty family had more than $800bn wiped off their fortunes during last week’s price falls.

Elsewhere, the pound fell for a fifth straight session, as trader nerves over the Prime Minister’s stated hardline approach to Brexit negotiations continued. Rabobank foreign exchange strategist Jane Foley said Mr Johnson’s approach to negotiations was “likely to ensure that Brexit remains a driving factor for the pound”.

The FTSE 100 outperformed its continental peers, boosted by sterling’s woes.

Elsewhere, movements were fairly limited, among low trading volumes, with many moves likely to have been driven by funds repositioning their holdings before the end of the year.

The London Stock Exchange will only be open until 12:30pm today, and it will be closed on Christmas Day and Boxing Day.