B R Shetty, the owner of Finablr Plc sold his business to an Israeli-UAE consortium for $1. He was once one of the top Indian origin billionaires in UAE, who reportedly had support from royal families of the UAE. Let’s see what led to the fall of B R Shetty.
Crux of the Matter
B.R. Shetty In India
B.R. Shetty was born on 1st August 1942 in Udupi, Karnataka. He completed his education in the field of pharmaceuticals from Manipal in India. Later he became Vice-Chairman of the Municipal Council in Udupi and married Chandrakumari Shetty.
Rise of BR Shetty
- In 1973 B.R. Shetty landed in UAE as the country’s first medical representative.
- In 1975 he founded a private health clinic New Medical Centre (NMC) with his wife. Today, it is the largest private healthcare provider in the UAE with over 4 million patients annually. It is also the first healthcare company from the Gulf Cooperation Countries (GCC) and the first company from Abu Dhabi to be listed (in 2012) on the premium segment of the London Stock Exchange and be a part of the FTSE 100 Index.
- In 1980, BR Shetty bought ownership of UAE Exchange. UAE Exchange works as an intermediate to send money of expats easily to their families in their respective home countries. By 2016, it had expanded its operations in +31 countries with ~800 direct offices.
- In 1981, he established NMC trading to market and distribute goods across UAE.
- In 2003, he launched Neopharma a pharmaceutical manufacturing company in UAE. It is a contract based manufacturer for companies like Pfizer, Merck, Boots UK, etc.
Shetty At His Peak
- In 2005, he received the highest civilian award from the UAE government.
- In 2009, he received the Padma Shri award from the Indian Government.
- In 2010, he bought 2 floors in the world’s tallest building Burj Khalifa.
- In 2014, he acquired Travelex, a major foreign exchange company.
- In 2017, he announced to invest ₹1000 crores in a Mahabharat film but the project was shelved later.
It is believed that he had support from royal families and powerful individuals of UAE to open a private hospital chain NMC because in UAE healthcare sector is taken care of by only the public sector.
Beginning Of The End
- In 2018, he established Finablr as a holding company for UAE Exchange and UK-based Travelex. Finablr was listed on the UK stock exchange in May 2019.
- In 2019, Muddy Waters Research, a firm known for short-selling, published a report about financial insecurities and a potential threat to NMC health.
“NMC’s reported cash balance shows two red flags that indicate they could be materially overstated… we believe…NMC materially underreports its rejection rate for reimbursement, thereby inflating its reported margin…We are unsure how deep the rot at NMC goes, but we do not believe that its insiders or financial can be trusted.”Muddy Water Research‘s Report On NMC Health
Fall Of B R Shetty
- In February 2020, over allegations of a corporate governance scandal, Shetty was removed from the board and post of chairman at NMC Health and from the board of Travelex. Moreover, authorities halted the trading in NMC and Finabir on the UK exchange.
- The authorities found that the company had an undisclosed debt of $2.7 billion in addition to the disclosed debt of $2.1 billion.
- In May 2020, the company’s revised debt came out to be $6.6 billion owed to over 80 financial institutions.
- In December 2020 – BR Shetty’s Finablr Plc sold its business to an Israeli-UAE consortium for $1.
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- NMC Health has been recognized as one of the UAE’s strongest brands by the Superbrands Council since 2015. It has been selected by the Abu Dhabi National Oil Company (ADNOC) to manage operations of Ruwais Hospital in the Al Dhafra region.
- Dubai has one of the best public health systems in the world, run by the Dubai Health Authority (DHA), which oversees both public and private healthcare. The Emirate has four major government hospitals: Dubai, Rashid, Latifa, and Hatta.
- Shetty’s first clinic was a remarkably small one that opened in Abu Dhabi in 1975. He himself had run the clinic, cleaned the small property, and driven the ambulance personally, while his wife took care of patients.