Abraaj Capital of DIFC: How 16 years of success, collapsed in less than 5 months!

Just on June 3^rd, we had commented that Abraaj is weeks away from liquidation.

Kuwait Govt has filed a case for liquidation whose hearing is to be held on June 29^th, 2018, wherein, a liquidator would be appointed.

The clock is ticking furiously to reach a settlement before the court date. Either way, it’s a death watch for Abraaj.

Assuming that, somehow, Abraaj finds USD 100m loan amount before 29th June, that Kuwait is asking for (which it did not have last week) then Kuwait will ask for the remainder USD 285m as well immediately.

If Kuwait’s tactic of filing liquidation works to get money from Abraaj, then why would anyone with a brain allow a standstill knowing very well that majority of top clients will leave Abraaj (all top, middle and many lower level employees have already quit), thereby, having a huge incentive to ask their money back like Kuwait is doing, hence leading to a complete collapse.

Standstill agreement does not make any sense when a court case has already been filed in Cayman and watch the money of remainder creditors go to one company alone.

Just like any major financial case of misappropriation or fraud, whoever doesn’t file a case, will be left behind especially in the murky land of the Middle East.

While one suitor, Colony Northstar, has walked away from Abraaj purchase citing risks, the other one, Cerebrus, has offered a paltry USD 125m (without assuming ANY debt obligations) indicating how badly the firm has lost it’s entire goodwill and will sell at barely any P/E over the next 10 years, if it can sell it’s clients and asset base (which seems extremely unlikely at this point).

Even if Abraaj survives the clash with Kuwait pension fund, this company will shut prior to Dec 2018 at the most. 

What is most alarming and surprising that despite being a DIFC registered entity, DIFC has not made any serious comments except saying that they are monitoring the situation, thus leaving the battle to be fought in the courts of US, UK or Cayman etc further dwindling the case for any major financial corporation to have any base at all in the DIFC.

Kuwaiti pension fund says to see Abraaj case through to end

Abraaj Creditor Seeks Embattled Dubai PE Firm's Liquidation

Abraaj creditor presses on with liquidation threatening restructuring

As a background, my comment on June 3 was that, one of the leading Private Equity firms in the world from DIFC, Dubai - Abraaj - was ousted as a scam on 2 Feb 2018!

By no other than Bill Gates, World Bank, the French and the British Govt!

Now in just 4 months, CEO, CFO, COO, 4 managing partners and dozens of staff have left or been fired from a firm that managed $14b!

Arif Naqvi, the poster child, founder, ex CEO and now Chairman, has been asked to totally keep away from the company, not even allowed to remain a Chairman!

This company could shut any week now and bring even more glory about the cheating and fraud that occurs in or through Dubai!

So far no one has gone to jail but such complex frauds done by the very people at the top take months or years to come out, so expect people to leave Dubai quickly else many may end up behind bars!

They are selling assets at fire sale prices, which means at less than half the value, and investors want their money back immediately but we all know that most of the money is now a loss and some of it was misappropriated and some was misused into alternate projects!

Some potential buyers of Abraaj have walked away after doing a basic due diligence!

Even Deloitte has said that there are “discrepancies” in an internal audit.

References:

Colony NorthStar Is Said to Walk Away From Abraaj Fund Unit Deal

Abraaj to face creditors in crunch meeting over future

Cerberus bids $125m for Abraaj’s private equity business