Dubai Buyout Firm Abraaj to Meet Creditors as Scrutiny Grows

(Bloomberg) -- Abraaj Group, which has been roiled by allegations of misused funds, will meet shareholders and lenders on Monday to discuss the restructuring of the Dubai-based asset manager.

Chief Executive Officer and founder Arif Naqvi and other senior managers will update stakeholders on the talks with potential acquirers of its asset-management business, ongoing deals and media speculation, Abraaj said in a statement.

The Middle East’s biggest buyout firm is facing growing concern about its viability amid impending loan repayments and greater regulator scrutiny. Kuwait’s Public Institution for Social Security said Abraaj was unable to repay a $100 million loan and $7 million interest by the agreed date of June 3, the Wall Street Journal reported last week.

Such a meeting is “critical” given Kuwait’s recent petition to liquidate, said Khalid Howladar, managing director of credit and sukuk advisory Acreditus. “In order to realize fair-asset value for creditors, they need to avoid a fire-sale. It’s hard to negotiate effectively with potential bankruptcy proceedings hanging over the company.”

Deloitte Review

Abraaj has been under intense scrutiny since February when some of its investors commissioned an audit to investigate the alleged mismanagement of money in its $1 billion health-care fund. Since then, preliminary findings from a review by Deloitte LLP -- made at Abraaj’s request -- have also thrown up potential discrepancies in the accounting at some of its other pools, according to people with knowledge of the matter.

Read more: Dubai Firm Rattles Mideast Dealmaking With Alleged Misused Funds

Colony NorthStar Inc. ended talks to buy a majority stake in Abraaj’s fund-management unit after its due diligence efforts raised concerns about the firm, people with knowledge of the matter said last week. Cerberus Capital Management LP is still in discussions about the stake and is carrying out its own due diligence, the people said.

“It seems likely that a combination of new capital into individual funds and the holding company, asset sales and fund wind-downs will be necessary to prevent the entire group from unraveling,” said Richard Segal, a senior analyst at Manulife Asset Management Ltd. in London.

Omar Lodhi and Selcuk Yorgancioglu, co-CEOs of Abraaj’s asset-management unit, will also attend Monday’s meeting, which aims to “make further orderly progress, in the interests of all stakeholders, toward a consensual resolution of all outstanding issues,” Abraaj said. The company is being advised by Houlihan Lokey.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Business News News On BloombergQuint