Qatari, U.A.E., Indian Lenders Face Exposure to Troubled Finablr

(Bloomberg) --

Banks from Qatar, the United Arab Emirates and India risk losing millions of dollars due to their exposure to Finablr Plc, the foreign-exchange operator that’s preparing for potential insolvency, according to people with knowledge of the matter.

Qatar National Bank, Doha Bank, National Bank of Fujairah, Commercial Bank International and Bank of Baroda are still owed about $300 million by Finablr’s parent BRS Ventures, which is owned by Bavaguthu Raghuram Shetty, some of the people said, asking not to be identified because the matter is private. The loan was used to refinance a bridge loan for the acquisition of Travelex Holdings Ltd.

Shetty pledged about 56% of his shares in the London-listed firm as collateral for the loan when he was unable to repay it after Finablr’s initial public offering last May, the people said. Since listing, the shares have plummeted about 93%, giving Finablr a market of 77 million pounds ($89 million) when it was halted from trading this week. That’s down from a peak of 1.5 billion pounds in December, making it one of the most -destructive IPOs in London in recent years.

While all banks may struggle to recover the funds, Qatari lenders are likely to be hit the hardest due to an ongoing standoff between the gas-rich Gulf state and the U.A.E. where BRS Ventures is based. A group of countries, led by Saudi Arabia, cut commercial and political ties with Qatar in 2017 so it’s not clear how the Qatari banks could enforce their claims against Shetty’s company, the people said.

Insolvency Proceedings

Lenders are in talks with Houlihan Lokey Inc., who’s advising BRS Ventures, to try to resolve the situation, some of the people said.

Representatives for BRS Ventures, Commercial Bank International and National Bank of Fujairah declined to comment. Representatives for Qatar National Bank, Doha Bank and Bank of Baroda didn’t respond to requests for comment.

Finablr, which owns foreign-exchange businesses including Travelex, this week said it hired an adviser to prepare for potential insolvency proceedings. The firm also warned the board couldn’t accurately assess its financial situation and said its chief executive officer was stepping down.

Shetty hired Houlihan Lokey to explore strategic options for BRS Ventures, people familiar with the matter said last month. The investment banking firm will revamp debt and seek potential investment partners or sell assets from the portfolio, which holds 30 companies.

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