Mubadala-backed fund acquires minority stake in London-listed Finablr

The move comes as the troubled payments firm hires an adviser to help it prepare for potential insolvency proceedings

 Promoth Manghat, group chief executive of Finablr has stepped down amid the ongoing crisis for the payments firm. Ravindranath K / The National

A fund owned by Abu Dhabi’s strategic investment arm Mubadala Investment Company acquired a minority stake in London-listed Finablr, as the embattled payments company hired an adviser to help assess its financial situation.

MIC Capital Partners, an investment vehicle owned and operated by Mubadala Capital, gradually accumulated a 3.4 per cent stake in Finablr, a Mubadala spokesman told The National on Tuesday.

“They have taken a stake over the past several weeks in Finablr, reaching a level of disclosure required by the regulators,” the spokesman said.

The move by Mubadala, which manages assets worth $240 billion (Dh881.5bn), to gather stake in the company comes at a difficult time for Finablr, which has now hired an adviser to prepare for potential insolvency proceedings.

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The company is working on a “rapid contingency plan", Finablr said in a regulatory filing to the London Stock Exchange, without identifying the adviser. The company is evaluating its situation with a “view to maximising value in the group”, it said.

Britain’s market regulator on Monday suspended trading in Finablr, the payments and foreign exchange company founded by billionaire BR Shetty, after its chief executive stepped down and the board warned it was unable to assess its financial position.

There is “material uncertainty about the group’s ability to continue” operations, Finablr board told the LSE. 

The company said it is investigating cheques worth $100 million, dating back to before its initial public offering last year 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,” the company said in the bourse filing.

The company has hired Kroll, the US-based corporate investigations and risk consulting company, to undertake an independent review.

The board is also is in discussions with an independent financial adviser to look into its debt and cash flow position and to support the management team in addressing its short and longer-term financing needs, the company said.

Finablr’s shares have tumbled about 94 per cent this year and its market cap has shrunk to £77.2m (Dh341m), according to exchange data. 

The company was created in 2018 by Mr Shetty as a holding company to consolidate his finance brands including Travelex based in London – which Finablr acquired in 2014 for £1bn –and UAE Exchange.

Finablr was listed on the LSE in 2019 in a deal that valued the company at $1.3bn. 

The platform processed more than 150 million transactions in 2018, managing nearly $115bn in volume for its customers.

Finablr has also acquired a number of companies including Indian digital payments provider TimesofMoney from Network International and digital gifting platform Swych in 2018. One of its subsidiaries BayanPay recently received a licence to operate in Saudi Arabia.

The company’s troubles compounded after its Travelex business came under a ransomware attack late last year. While the exchange platform recovered from the cyber attack, it is now facing business disruption from the global outbreak of the coronavirus.

UAE Exchange, one of Finablr’s brands, has also suspended all new transactions at its UAE branches, according to Reuters.

Finablr’s owner, Mr Shetty, is also the founder of UAE's NMC Health, which has asked its debtors for a standstill to help stabilise the entity's financial situation.

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

Finablr’s business has also been impacted by its exposure to NMC Health, the company had previously said. 

On March 12, Finablr said “adverse perceptions in the market that the circumstances surrounding NMC Health ... have exacerbated current levels of stress on the company’s cash flow position”.

“These factors place significant constraints on the
company’s access to the daily liquidity the company needs to manage its business effectively and its ability to negotiate longer term financing,” the company said.