From its origins in 2001 as a side project of the luxury Swiss travel group Kuoni, visa processing giant VFS Global has grown to be a $2.5bn (£2bn) company that remains largely unknown. It is owned by a private equity fund – and yet handles some of the most sensitive personal held by dozens of governments around the world.
Formerly based in India but now headquartered in Dubai with offices in 147 countries, VFS has reached such a scale that it processed more than 25 million visa applications last year alone. It has dealt with passport details and financial histories on behalf of the UK Home Office and 61 other governments.
Investors in the outsourcing company include the Chinese and Abu Dhabi investment authorities, the Ohio Police and Fire Pension Fund, and yoghurt billionaire Theo Muller.
But while VFS has undoubtedly been a profitable success for founder and chief executive Zubin Karkaria, providing the public with transparency over its financial and tax operations does not appear to have been its priority.
Obtaining financial accounts from Dubai is not possible, while the rest of the firm's corporate structure, which features entities in the Cayman Islands, Jersey and Luxembourg, is also complicated and opaque.
Karkaria, a 51-year-old former travel executive from Mumbai, India, is the company’s main figure. In fact, VFS describes him as the “pioneer of the visa outsourcing model”.
In an interview with Forbes last year, he explained that he started VFS in 2001 while at Kuoni and after he had “persuaded the US government to pilot a scheme for Indian visa applicants to the US at its Mumbai embassy”.
In 2003, the company – then based in Mumbai – won its first contract with the British government: to administer visa applications made in India to come to the UK.
Over the next few years, it won similar contracts with other European governments including France and Germany.
Then, in 2014, it won a contract with the UK to administer around 70 per cent of the UK’s visa applications. This contract mandated the provision of optional user-paid services like “premium lounges”, courier return services and “super priority” visas.
The UK’s contract was not with “VFS Global” – but with VF Worldwide Holdings, a company registered in the African tax haven of Mauritius.
The most recent financial records we could find for VF Worldwide Holdings are from 2009. At that point it was by far the most profitable subsidiary in the VFS group, reporting profits of £20m. By comparison, its Indian parent company disclosed pretax profits of INR 212m (£2.6m).
VF Worldwide Holdings, which relocated to Dubai in 2017, is now a key holding company for the group and has received hundreds of millions of pounds from the dozens of governments it deals with.
The UK government alone has paid an estimated £150m to it since the start of its 2014 deal.
In 2016, Kuoni Group was bought by Swedish private equity firm EQT for $1.5bn. Since then, VFS has seen extraordinary growth.
According to high-level VFS holding company accounts in Luxembourg – a step further up the corporate chain than the Dubai entity – revenues increased by 60 per cent between 2016 and 2018. The company reports that its growth has been driven by “higher value-added service revenues”, meaning more applicants buying expensive premium services. Lawyers say these services have led to the “commercialisation of life decisions”.
An analysis of the Luxembourg accounts suggests that VFS’s shareholders have extracted CHF664.8m (£567m) via dividends and writing off intercompany loans in the past two years.
The most recent success for VFS came in 2018 when it landed another major deal, this time with the Canadian government.
Having recently sold off the less profitable businesses in the Kuoni Group, EQT is now rumoured to have put VFS up for sale at an estimated price of $2.5bn.
VFS’s response to our request for comment suggested that such reports were “based on market rumours”.
But the management’s outlook for the market is sunny. Their Luxembourg holding company – the catchily named Kiwi VFS Sub Sarl I – predicts that trends including “global concern regarding security threats, migration control and the increased outsourcing trend by governments” will “further strengthen the attractiveness of the visa outsourcing industry”.
Additional reporting Nick Mathiason and Ted Jeory