Abraaj’s black sheep status is casting a shadow of doubt on the integrity of investments belonging to several UAE firms listed on the Abu Dhabi Securities Exchange, who earlier this week have revealed their exposure to the private equity firm.
The announcements from these firms come as a response to a circular issued by the UAE’s Securities and Commodities Authority (SCA), which stipulates that all UAE firms, listed on the Abu Dhabi and Dubai markets, must disclose the level of their exposure to The Abraaj Group.
6 major names in potential trouble?
The companies that have revealed exposure to Abraaj are 6 in total. They are:
1. First Abu Dhabi Bank
2. United Arab Bank
3. Al Qudra Holding
4. Waha Capital
5. Al Buhaira National Insurance Company
6. Emirates Insurance
First Abu Dhabi Bank (FAB), a major lender in the UAE which was previously comprised of banks First Gulf Bank and National Bank of Abu Dhabi, said on Tuesday that it gave Abraaj a $21.4 million (Dh78.6 million), three-year secured loan that matures in April 2019. The loan is “collateralized with Abraaj Holding stakes in its funds which invested in various companies globally”, FAB said in a statement to the Abu Dhabi Securities Exchange.
United Arab Bank has indirect exposure “through customers represented with two entities that are partially owned by Abraaj”, the bank said in a filing to Abu Dhabi Securities Exchange.
Al Qudra Holding has indirect exposure totaling $16.7 million (AED 61.6 million) through two independently managed funds, the Abraaj Infrastructure and Growth Capital Fund, and Abraaj Buyout Fund II. The company said it has been reassured that the Abraaj restructuring has not affected the portfolio management or its value, as it is linked to market fluctuations and under independent management.
Waha Capital, an Abu Dhabi-based venture capital firm, said it has no direct exposure in Abraaj nor any of its funds. It has an indirect connection with Abraaj through Aqua Consortium (holder of the Stanford Marina group of companies, including Stanford Marina, Grandweld and Gallagher International) of which Waha owns a 49% stake and the other 51% is “ultimately held” by Abraaj, Waha’s filing to ADX said.
Al Buhaira National Insurance Company (ABNIC) on Monday uncovered its investments with The Abraaj Group. ABNIC said it has $1.95 million (AED 8.437 million) in exposure to Abraaj and its funds, according to filing to the Abu Dhabi Securities Exchange (ADX).
Emirates Insurance explained it has $2,453,300 in exposure to Abraaj. The sum is invested in The Abraaj Buyout Fund II L.P.
On the other hand, the companies that have declared no exposure include: Abu Dhabi Commercial Bank, Invest Bank, RAK Properties, RAKBank, RAK Ceramics, Julphar Gulf, and Aramex.
TIMELINE: The rise and fall of Abraaj Group
Abraaj’s fall from grace
The major investments firm fell on hard times in February when 4 investors came forth doubting the integrity of the $1 billion healthcare fund they had a share in. Following an investigation by KPMG, which found Abraaj innocent, the investors hired another firm, Deloitte, to take another look at the company’s finances.
This time, however, discrepancies were found, and Abraaj subsequently filed for liquidation.
As if that wasn’t enough, Arif Naqvi, the founder of Abraaj Group, was facing criminal charges last month after a cheque handed to creditors bounced.
Abraaj’s fall from grace has led to it becoming somewhat of a black sheep in the Gulf, as the company tries to save face and find its place once more in the region.