Finablr shares suspended from trading as chief executive steps down

Board cites 'material uncertainty' about its ability to continue trading as it hires restructuring firm to assess its finances

Abu Dhabi, United Arab Emirates, October 22, 2019.  
Fintech Abu Dhabi at ADNEC.
--Promoth Manghat on Building a Global Fintech Locally.
Victor Besa/The National
Section:  BZ
Reporter:  Nada El Sawy

Britain's market regulator suspended trading in Finablr, the UAE payments and foreign exchange company founded by billionaire BR Shetty, as its chief executive stepped down and its board warned it is unable to assess its financial position.

Finablr's board said there is "material uncertainty about the group's ability to continue" operations, according to a company regulatory filing on Monday on the London Stock Exchange, where its shares trade.

The company is also investigating cheques, dating back to before its initial public offering, worth $100 million (Dh367m) that may have been used as security for financing arrangements for the benefit of third parties.

"The board is looking to put in place a package of urgent measures aimed at restoring confidence and stability across its stakeholders," Finablr said.

These measures include beginning the search for a new chief executive after Mr Promoth Manghat decided to step down from his position. The executive has agreed to "support" the group while the board finds the next successor.

Finablr's board also decided to set up a committee of its independent non-executive directors to review of the company's liquidity and cashflow management, its financial and debt position, and its strategic options.

It hired Kroll, the UK-based corporate investigations and risk consulting firm, to undertake an independent review of its finances.

Finablr will also appoint an accounting advisory team to "support and strengthen the company's finance function" with a focus on liquidity, it said.

The board is in discussions with an independent financial adviser to conduct a review of its debt and cashflow position and to support the management team in addressing its short- and longer-term financing needs, it said.

Last week, the company said it will commission an independent investigation into its financial position as its business is impacted by the novel coronavirus as well as its exposure to the related business NMC Health, also founded by Mr Shetty.

Finablr's shares, which had plunged 80 per cent on March 12 and then surged 150 per cent the following day, slipped by 5.2 per cent before the UK's market regulator the Financial Conduct Authority (FCA) agreed to the temporary suspension of the company's shares.

Finablr was created in 2018 by Mr Shetty as a holding company to consolidate his finance brands including Travelex and UAE Exchange. It was listed on the London Stock Exchange in 2019 in a deal that valued the company at $1.3 billion.

Mr Shetty recently resigned as the director of NMC Health, after the company was accused by short seller Muddy Waters Research in December of inflating cash balances, overpaying for its assets and understating its debt.

On March 12, Finablr cited a number of issues affecting its business currently, including travel restrictions to limit the spread of coronavirus, the recent credit downgrade of Travelex’s bonds and a liquidity squeeze at both group and operational business.

"Since that announcement, these constraints have become amplified and have now reached a point where they are having a material adverse impact on the company's operations," Finablr said on Monday.

As a result, the company is no longer able to provide certain payment processing services, it said.

The company processed over 150 million transactions in 2018, managing nearly $115bn in volume for its customers.

Finablr’s stock has tumbled about 94 per cent this year and its market cap has shrunk to just over £81.4m (Dh368.3m), according to exchange data.