Shares in Finablr (FIN)* plunged by a quarter on the news that stock representing 56 per cent of the group has been pledged as collateral for borrowings. The 392m shares have been committed by BRS Ventures & Holdings Limited – a company owned by Dr Bavaguthu Raghuram Shetty, who founded Finablr as well as NMC Health (NMC). The latter has recently been the subject of a Muddy Waters' short report.
The borrowings raised by BRS Ventures date from March 2016, and were used to refinance an acquisition facility relating to the purchase of currency exchange business Travelex in January 2015. The original amount of the borrowing has been reduced by sums received from Finablr’s initial public offering (IPO) in May 2019, and other cash flows of entities belonging to the BRS group.
Finablr’s market value hit a new low in response. Sentiment had already been knocked by the newsflow around NMC, not to mention the disposal of 40.5m shares in the group by two investors earlier this month, in a transaction designed to reduce the sellers’ “outstanding indebtedness”. The investors in question – Saeed Mohamed Butti Mohamed Khalfan Al Qebaisi and Khaleefa Butti Omair Yousif Ahmed Al Muhairi – simultaneously offloaded 31.2m shares in NMC.
A cyber-attack also hit Travelex on New Year’s Eve, leading it to take all of its systems offline. Finablr’s other brands were unaffected. In a statement following the announcement about BVR’s share pledge, Finablr said that its operations continue to function as normal. It added that the cyber incident is in the process of being resolved, has no impact on its 2019 results and is not expected to have a material impact on its performance in 2020.
The group has sought clarification from BRS about the pledge disclosures. “BRS has reassured the company around the level of security represented by its shareholding in Finablr and the discussions that it has had with its banking group around repayment/refinancing of the loan as well as the other collateral sources should these be required”.
