Abraaj de­nies any wrong­do­ing

Arab Times - - FRONT PAGE -

Saudi Ara­bia has de­tained a prom­i­nent Is­lamist scholar, ac­tivists said Thurs­day, in a widen­ing crack­down on dis­sent in the ul­tra-con­ser­va­tive king­dom, which is un­der­go­ing sweep­ing eco­nomic and so­cial re­forms.

Rights cam­paign­ers and on­line ac­tivists said Sheikh Sa­far alHawali, a Sunni Is­lamist scholar and lead­ing fig­ure in Saudi Ara­bia’s Is­lamic Sahwa reformist move­ment, had been taken into cus­tody.

They did not give fur­ther de­tails about the case of the scholar, who has pushed a line of an­tiAmer­i­can­ism and Is­lamic rule. (AFP)

DUBAI, July 12, (RTRS): Some in­vestors in funds man­aged by Dubai-based Abraaj want to block the sale of as­sets to Colony Cap­i­tal pend­ing a re­view of Abraaj’s han­dling of funds, ac­cord­ing to a re­port seen by Reuters, po­ten­tially de­lay­ing a deal key to the sur­vival of the in­vest­ment man­age­ment busi­ness.

United States-based Colony of­fered last month to buy the fund man­age­ment unit that runs Abraaj’s Latin Amer­ica, Sub Sa­ha­ran Africa, North Africa and Tur­key funds af­ter months of tur­moil at Abraaj trig­gered by a dis­pute with in­vestors over the use of their money in a $1 bil­lion health­care fund.

Abraaj de­nies any wrong­do­ing, but the row has weighed heav­ily on the Mid­dle East and Africa’s largest pri­vate eq­uity firm, which filed for pro­vi­sional liq­ui­da­tion in the Cay­man Is­lands last month.

A re­view of Abraaj’s han­dling of in­vestor money is likely to de­lay the Colony trans­ac­tion, ac­cord­ing to a re­port by Abraaj Hold­ings pro­vi­sional liq­uida­tors, PwC.

The sale of some or all of Abraaj’s fund man­age­ment busi­ness, Abraaj In­vest­ment Man­age­ment (AIML), is seen as crit­i­cal to the busi­ness avoid­ing fi­nan­cial col­lapse.

How­ever, the PwC re­port also said other po­ten­tial bid­ders had ex­pressed in­ter­est in AIML as­sets, and at least two of them were vi­able al­ter­na­tive deals. One of those suit­ors is Cer­berus Cap­i­tal Man­age­ment, sources fa­mil­iar with the mat­ter said.

PwC and Abraaj said they could not pro­vide any pub­lic com­ment on the re­port. Colony de­clined to com­ment. Cer­berus did not im­me­di­ately re­spond to re­quests for com­ment.

The PwC re­port said cer­tain lim­ited part­ners had ex­pressed con­cerns over the Colony deal and that they wanted a re­view of the funds be­fore agree­ing to a sale of Abraaj Hold­ings lim­ited part­ners stakes. It did not iden­tify the lim­ited part­ners.

The re­view is be­ing re­quested to “un­der­stand if there has been any un­known mis­ap­pro­pri­a­tion of cash in the funds”, said the PwC re­port dated July 11.

It said the un­cer­tainty was caus­ing Abraaj’s in­vest­ment plat­form to be un­sta­ble and that there could be sig­nif­i­cant di­lu­tion in the value of Abraaj’s lim­ited part­ners stakes in the short term.

“Time is of essence given AIML does not have any cash,” the re­port said, adding AIML was re­liant on Abraaj Hold­ings for fund­ing and was ac­cru­ing op­er­a­tional costs.

Abraaj has been bat­tling al­le­ga­tions by in­vestors in­clud­ing the Bill & Melinda Gates Foun­da­tion and In­ter­na­tional Fi­nan­cial Corp that “it mis­used money in the health­care fund. The Gates Foun­da­tion and IFC have de­clined to com­ment on the row.”

The dis­pute has led to a halt in Abraaj’s fundrais­ing ac­tiv­i­ties and a se­ries of man­age­rial shake-ups as it tack­led en­su­ing debt re­pay­ment prob­lems.

Abraaj’s to­tal debt stood at $1.07 bil­lion, the PwC re­port said, in­clud­ing $501.4 mil­lion in un­se­cured debt and $572.4 mil­lion se­cured debt. It said Abraaj bor­rowed to cover a liq­uid­ity short­fall caused by in­suf­fi­cient man­age­ment fee in­come and car­ried in­ter­est be­tween 2014 to 2017.

Abraaj’s to­tal as­sets avail­able to the pro­vi­sional liq­ui­da­tion process were val­ued at $147.7 mil­lion, ac­cord­ing to the re­port.

The re­port said Colony’s of­fer was $229.3 mil­lion to buy the com­pany’s man­age­ment rights and lim­ited part­ner stakes of six funds and that, as there had been other ex­pres­sions of in­ter­est, pro­vi­sional liq­uida­tors were also look­ing for al­ter­na­tive so­lu­tions to sta­bi­lize the plat­form as quickly as pos­si­ble.

The PwC re­port said Abraaj faced three broad out­comes.

One was to con­tinue ne­go­ti­a­tions with Colony, an­other was to re­place AIML with a new in­vest­ment man­ager and the third was to dis­con­tinue AIML, it said.

The re­port also said the pro­vi­sional liq­uida­tors had been un­able to ob­tain stand­alone an­nual fi­nan­cial state­ments or man­age­ment ac­counts for the com­pany, adding that it is highly ir­reg­u­lar for there not to be stand­alone monthly man­age­ment ac­count­ing re­port­ing and stand­alone au­dit re­ports. “This lack of fi­nan­cial record-keep­ing raises the ques­tion of how the com­pany’s di­rec­tors were able to en­sure the com­pany was sol­vent and be­ing ef­fec­tively man­aged,” it said.

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