Following an approval from the Cayman Islands Courts for a provisional liquidation and business restructuring, Abraaj Holdings inked a sale and purchase agreement with U.S.-based Colony Capital for its Latin America, Sub Saharan Africa, North Africa and Turkey Funds management business.
According to the agreement, all of Abraaj’s staff in the eight offices will be transferred to Colony Capital. Further to the deal the U.S. based investment management company will oversee—on an interim basis—other group funds that it did not acquire so that Abraaj’s stakeholders have a complete global situation in place.
Colony Capital was initially in advanced talks to buy Abraaj’s fund management business but backed away after due diligence raised some red flags about the buyout firm.
Other investors such as Cerberus Capital Management LP and a unit of Abu Dhabi Financial Group had also previously showed interest in purchasing Abraaj’s fund management business. But none of the deals went through.
Troubles at Abraaj started when a group of its investors claimed that the Dubai-based private equity firm had misused some of the money from the company’s $1 billion healthcare fund. The company refuted these claims and proceeded to appoint KPMG to perform an internal review. However, that did not stem the fallout from the allegations and in May 2018 Abraaj’s founder and CEO Arif Naqvi stepped down.
Various investors with Abraaj have also sought to deploy measures to protect their investments.
On Wednesday, Sharjah state-owned carried Air Arabia appointed experts working along with its stakeholders to protect its investments in Abraaj. Air Arabia has an overall exposure of $336 million to funds managed by Abraaj. The carrier’s shares fell by 3.9% further taking its loss this week following the private equity firm’s devaluation to 12% according to Bloomberg.
But the saga, which began in February, seems to be coming to an end now after the order for court ordered restructuring came through.
“We are delighted to have crafted this comprehensive global solution for Abraaj and its stakeholders and sincerely hope that this can enable the process of rebuilding on all sides and also bring an end to the speculation that has swirled around Abraaj over the last months,” said , Tom Barrack, Executive Chairman of Colony Capital
Founded in 2002 by Arif Naqvi, Abraaj was once the Middle East’s largest private equity firm.