(Reuters) - NMC Health founder BR Shetty had pledged 7 million of the company's shares as security for debt, his holding company said on Monday, adding that the Indian billionaire currently has a 9.81% interest in the UAE healthcare group.
The holding company - BRS International - said Shetty had pledged the shares to Goldman Sachs as as part of a funded equity collar transaction, a complex structure used to help to build a stake in a company.
Shetty resigned as NMC's co-chairman last week, creating further uncertainty for the London-listed UAE company, which has seen its share price collapse in the past few weeks on doubts about the shareholdings of its major investors.
British regulators have said they are looking into NMC following a disclosure the Shetty had mistated the size of his NMC stake.
NMC shares were down 3.4% at 1453 GMT after briefly turning positive following the announcement. The broader blue-chip FTSE 100 index was down nearly 4%.
Shetty had said this month that his NMC shareholdings were under a legal review -- looking into a large portion of his shares signed to two of NMC's top investors in 2017, while some of his other stock had been pledged as security against loans.
An "equity collar" is a derivative instrument that allows the owner of a large stake in a company to limit their downside in the event of a sell off, though it also caps the upside.
A "funded equity collar" deal, as used by Shetty, adds another layer of complexity to the instrument, and involves the owner taking a loan from a bank using the underlying shares as collateral.
(Reporting by Pushkala Aripaka in Bengaluru and Abhinav Ramnarayan in London; editing by Louise Heavens and Jane Merriman)
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Updated Date: Feb 25, 2020 00:14:47 IST