SCA to investigate Abraaj for local investor impact
UAE regulator to move forward after tangible evidence
The UAE’s Securities and Commodities Authority (SCA) is investigating whether any local investors are affected by the current financial problems being faced by the private equity firm Abraaj, according to a top executive.
Dubai-based Abraaj is currently facing allegations that investment funds were misused, in particular that it commingled about $95 million
(Dh349 million) after it faced cash shortages
“We are investigating this and we are in contact with [the] DIFC [Dubai International Financial Centre] to see where the national investor is affected. Once we have tangible evidence, we can move forward with this in coordination with Federal and local governments,” Obaid Al Za’abi, chief executive of the UAE’s Securities and Commodities Authority. told reporters in Abu Dhabi on Sunday.
“We have already sent a letter to DIFC on this,” he said without elaborating further.
This was the first public statement by a UAE regulator on this issue. The Dubai Financial Services Authority (DFSA), the financial regulator of DIFC, said in a statement to Gulf News: “The DFSA is aware of various matters involving Abraaj Group, which has a regulated entity in the DIFC, and relevant matters are under our attention. The DFSA cannot comment further on circumstances of individual firms.”
Abraaj, on the other hand said that they are not in a position to comment on discussions that the DFSA may be having with other parties.
We are investigating this and we are in contact with [the] DIFC [Dubai International Financial Centre] to see where the national investor is affected. Once we have tangible evidence, we can move forward with this in coordination with Federal and local governments.” Obaid Al Za’abi (left) | SCA chief executive
“Abraaj continues to actively engage with the DFSA and remains in close dialogue with the regulator. The regulator is fully apprised of key developments taking place at the firm,” the company told Gulf News.
The UAE’s financial markets are solid and will take off again in terms of liquidity and volume of trading due to positive indications from the government and an improvement in the economy, the chief executive of the Securities and Commodities Authority (SCA) said.
“I am optimistic because of the incentives our government has already issued. The positive effect will come in a couple of months on [our] financial markets,” said Obaid Al Za’abi, referring to the new plans announced by the government to boost the economy, which include the granting of longterm visas for investors as well as
100 per cent foreign ownership of companies.
Abu Dhabi also announced a
Dh50 billion stimulus package to give an impetus to growth in the next three years.
“The UAE economy is steady and growing. There is a good plan, all indications are very positive in terms of inflation, in terms of GDP
[gross domestic product], [the] oil price is good and investments in infrastructure [are] going on. All macro indicators of the economy are positive,” Al Za’abi said.
He also expects IPO activity to pick up by the end of this year. “We are getting applications frequently and in the last quarter of 2017 we got two. There is something in the pipeline but they [companies] are waiting for the right time to go ahead. They are in freeze [mode] because of the volume of trading and liquidity. Once liquidity improves, they will decide to go ahead with IPO.”
He also said they want brokerage firms to expand their services to include underwriting, promoting, arranging, advising, fund management and investment management, among others. On credit-rating agencies, Al Za’abi said if the firms want to practise their activity onshore, they should register with the authority.
“We recently issued regulations on this. This is the focal point of security jurisdiction to license credit-rating agencies in terms of governance, ethics and business conduct. If they would like to do to business activity onshore, they should come and register with us.”