Oman's Taageer Finance and Sohar International Bank disclosed they have exposures to embattled UAE healthcare company NMC Health.
Taageer, which provides car finance and funding for industrial equipment, said in a statement on Monday to the Muscat Securities Market that it had a 1.23 million rial (Dh11.72m) exposure to NMC.
The Oman Investment Fund holds a 33.6 per cent stake in Taageer Finance and is the largest shareholder.
Sohar International Bank said its exposure stood at 3.45m rials.
"The bank is considering all options and measures available to it, including enforcement of legal rights, to ensure realisation of the outstanding amount," the lender said in a statement to the Muscat bourse on Monday.
Sohar said it "rejected multiple requests from the company for additional credit facilities worth 43m rials", including a request to roll over the maturing loan, which was paid off in December 2019.
The loan amount to NMC represents 0.1 per cent of Sohar Bank's total assets.
"The prudent and diligent measures taken by the bank not only significantly reduced the exposure but also avoided a substantial increase of exposure to this company," Sohar said.
NMC was placed in administration by a UK court on the application of one of its biggest lenders, Abu Dhabi Commercial Bank, last week.
The joint administrators from turnaround advisory firm Alvarez & Marsal will take immediate control of NMC Health and will work on behalf of all stakeholders, ADCB said on Thursday.
Taageer's disclosure comes after HSBC Bank Oman revealed on Sunday that NMC owes it $16m (Dh58.76m), about 0.2 per cent of its total assets.
Bank Nizwa, also listed on Muscat Securities Market, said last week that it had a 5m rial exposure to the healthcare company through a subsidiary, Elegant Medical Centre.
Apart from ADCB, number of UAE banks also extended financing to NMC and they include Emirates NBD, Abu Dhabi Islamic Bank and Dubai Islamic Bank.
ADCB has an exposure of $981m to NMC. Its exposure increases to $1.16 billion when Finablr, another company owned by NMC Health's founder B R Shetty, is factored in. Finablr is not in administration.
Overall, UAE banks have a combined exposure of at least Dh8bn to NMC.
NMC made a series of damaging disclosures in the past few months after a report by activist investor Muddy Waters in December alleged that it had inflated cash balances, overpaid for assets and understated its debt.
Last month, the company revealed its debt stood at $6.6bn, substantially higher than the $2.1bn declared in its last filed accounts. A review committee also discovered evidence of “suspected fraudulent behaviour”.
After the disclosures, two joint non-executive chairmen, including Mr Shetty, as well as the executive vice-chairman, chief executive, chief financial officer and a member of the treasury department left the company.
NMC appointed Ithmar Capital's managing partner, Faisal Belhoul, as executive chairman on March 26 after the Dubai private equity firm took a 9 per cent stake in the healthcare company.
In February, the UK’s Financial Conduct Authority launched an investigation into NMC's activities after the company's shares were suspended from trading on the London Stock Exchange.
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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.”
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Manchester United 1 Brighton and Hove Albion 0
Man United: Dunk (66' og)
Man of the Match: Shane Duffy (Brighton)
