Who’s owed what, and 7 things you need to know about Abraaj
A court in the United Arab Emirates has dropped a criminal complaint against Arif Naqvi, the founder of Abraaj, for issuing cheques with not enough funds, as the embattled private equity company struggles to recover from a damaging few months, reports the Financial Times (FT) report.
“A judge in Sharjah said on Sunday that the case, pertaining to a $48.2 million cheque, had been dismissed at the request of the complainant Hamid Jafar, a businessman in Sharjah and founding shareholder in Abraaj.
A restructuring process overseen by liquidators appointed by a Cayman Islands court can now proceed to find a comprehensive resolution to the case with tentacles reaching some very large business sectors
Major UAE companies owned tons of money
According to a statement to Dubai Financial Market (DFM), Shuaa Capita,l the Dubai-based investment bank confirmed an $8.83 million exposure Abraaj.
“Shuaa Capital with its clients holds 3.65 interest in The Abraaj Buyout Fund II L.P valued at $8.83 million, split between Shuaa having a $4.9 million exposure while for its clients, it is $3.92 million,” the company said.
Air Arabia had disclosed to DFM $336 million worth of exposure to the Abraaj Group last June.
Ajman Bank said it had neither granted a loan or invested in any of Abraaj Group’s investment funds. However, it disclosed that the bank has entered into a syndication to finance Stanford Marine Company, in which Abraaj Capital acquired a 51% stake against mortgaging ships.
“The accrued amount, which is due now and payable by Stanford Marine Company, is Dh105 million,” Ajman Bank said in a statement to the DFM.
Emirates NBD, the biggest lender in Dubai by assets, said it has both direct and indirect exposure to the embattled private equity firm. The lender owns a stake in the parent company Abraaj Holding Group worth $21.3 million, it said in a statement to DFM.
“In addition, Emirates NBD has a total exposure of $17.6 million invested across three of Abraaj funds,” it said without naming the funds.
Commercial Bank of Dubai (CBD) said it has $166.3 million worth of exposure to the buyout firm through “secure credit facilities,” it said in a bourse filing.
Mashreq bank owns 16.7 million shares in Abraaj Holding valued at around $18 million, it said in a separate statement to the bourse.
“Mashreq also controls 12.5 million shares in Menasa Capital Holding, a Dubai International Financial Centre subsidiary of Abraaj, worth around $125,000, it added later.
7 things you need to know about Abraaj
1-The firm’s troubles began on February 2nd, 2018 when 4 investors hired independent investigators to look into the company’s $1 billion healthcare fund, after suspected foul play.
2- The 4 investors who backed the Abraaj Growth Markets Health Fund include the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation, Proparco Group of France and the UK’s CDC Group.
3- Abraaj was reported by Bloomberg to have peaked at $13.6 billion worth of assets in 2017.
4- Hamid Jafar, the founder of Crescent Group, a privately owned investment management firm, loaned Abraaj $300 million last December, specifically $200 million to Abraaj and $100 million to Naqvi.
5-Lack of confidence and a liquidity crunch has triggered debt defaults, pushing Abraaj to the brink upon which the firm had to seek court protection via provisional liquidation last month and the court appointed PwC as provisional liquidator for Abraaj Holdings and Deloitte as provisional liquidator for Abraaj Investment Management, the group’s asset management arm.
6- Abraaj was hit by a $188 million loss for the nine months until the end of March, according to a PwC report, with Abraaj’s debts standing at $1.1bn, including $501.4 million to unsecured creditors and $572.4 million to secured creditors, according to FT.
7- To repay creditors Abraaj could sell its limited-partnership stakes in its funds, valued at about $645 million, and other assets, including Pakistani utility K-Electric, bring the asset pool to $1.1bn, but given security of $917 million attached to them, it means potential net realisation is only $148 million, according to FT.