Abraaj founder Naqvi exits Air Arabia board
Debt woes mount as more lenders contemplate legal action against firm
Arif Naqvi, the founder of beleaguered private equity firm Abraaj, has resigned from the board of directors of Air Arabia, according to a statement filed by the airline on the Dubai Financial Market (DFM) yesterday.
According to the statement, the board discussed Naqvi’s resignation at meeting held on August 9. The board will nominate a replacing member within the coming weeks, the statement added.
In mid-June, the Sharjahbased airline had disclosed that it had $336 million (Dh1.2 billion) invested in Abraaj funds but said its exposure to the embattled group would not impact its operations. Air Arabia’s exposure to Abraaj was through fund portfolios and short-term investments.
Abraaj’s troubles began with investors — including the Bill & Melinda Gates Foundation and the International Finance Corp — making allegations of commingling and mishandling of their money in a $1 billion health care fund.
Faced with liquidity crunch and mounting debt burden, Abraaj filed for liquidation of its fund management business. The company, which has an estimated $13 billion-plus assets under management, is facing legal challenges from investors and creditors.
With the liquidation process under way in the Cayman Islands and attempts to sell its fund management not seeing results, investors in various funds are seeking legal help in recovering their money invested in Abraajmanaged funds or lent to the parent company as loans.
The private equity firm is undergoing a court-supervised restructuring after it was found to have borrowed money from some of its own funds to meet operating expenses without investors’ consent.
Abraaj has an estimated debt of more than $1 billion.