Abraaj files for provisional liquidation in the Cayman Islands

Arif Naqvi, chief executive officer of the Abraaj Group. (Getty Images)
Updated 14 June 2018
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Abraaj files for provisional liquidation in the Cayman Islands

  • Follows on weeks of speculation over company’s future.
  • Abraaj: “The company has made this application so that the rights of all stakeholders can be protected.”

LONDON:

Abraaj has filed for a court-supervised provisional liquidation in the Cayman Islands, marking a spectacular fall from grace for the Middle East’s largest private equity group.

The action — which will put the company’s future under the control of court-appointed liquidators — comes as a bid to head off petitions by creditors to wind up the firm, following months’ worth of allegations of financial mismanagement.
Abraaj plans to appoint Simon Conway of PwC Corporate Finance and Recovery, and Michael Jervis and Mo Farzadi of PricewaterhouseCoopers as the joint provisional liquidators (JPLs) of its holding company Abraaj Holding, according to a statement put out on Thursday.
The application was made ahead of a hearing later this month in a Cayman Islands court of a petition by Kuwait’s Public Institution for Social Security (PfISS), one of Abraaj’s unsecured creditors, to have the company wound up over missed payments on a $100 million loan.
“The company has made this application so that the rights of all stakeholders can be protected while the company and the JPLs promote a consensual restructuring of the company’s obligations,” the company said.
The appointment of provisional liquidators imposes a moratorium on the enforcement of all unsecured claims against Abraaj.
“Under the auspices of the court, the situation has now been stabilized, and we can move forward to meet the firm’s commitments and restore confidence in the platform,” said Sean Cleary, chairman of Abraaj Holdings, yesterday.
Founded in 2002 by Arif Naqvi, the Abraaj Group grew to become the largest buyout firm in the Middle East, at one point managing $14 billion worth of assets. Its funds, many of which are geared toward projects in emerging markets including Pakistan, attracted high-profile investments from the development community.
But it emerged in February that investors in an Abraaj health care fund — including the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corporation — had hired forensic accountants over concerns about the whereabouts of money they had invested.
Abraaj initially dismissed the allegations, commissioning an investigation by KPMG that exonerated it of any wrongdoing.
But rumors of mismanagement persisted, leading to Naqvi stepping back from investment decisions and the departure of senior executives.
Earlier this week, Deloitte — commissioned at the behest of investors unsatisfied with KPMG’s original investigation — found that Abraaj had commingled about $95 million worth of funds due to a cash shortage, but found no evidence of embezzlement.
By that time, however, Abraaj’s future existence had come into question, with PfISS and another unsecured creditor — reported by Reuters to be Auctus Fund Ltd. — filing petitions in a Cayman Islands court seeking the liquidation of the firm over unpaid debts.
Abraaj last week requested a standstill agreement from its creditors, amid reports it was seeking to sell its investment management business to US-based private equity firm Cerebrus Capital, which was reported to have offered just $125 million for the business.
“This (liquidation) process marks the culmination of an extremely complex and challenging phase of negotiations and detailed planning,” said Naqvi in a statement yesterday.
“Since our differences with certain investors came to light, we have worked exhaustively and transparently to investigate the matter and address their concerns … The intense public scrutiny and highly speculative rumors on these matters have put enormous stress on the Abraaj family of employees and partners, together with our investors and other stakeholders.
Naqvi said he expected the court-supervised restructuring process to take “a few months.”
Allen & Overy LLP, Carey Olsen and Milbank, Tweed, Hadley & McCloy LLP are serving as legal advisers and Houlihan Lokey are serving as financial advisers to Abraaj Holdings.


UK’s Quercus pulls plug on $570 mln Iran solar plant as sanctions bite

Updated 14 August 2018
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UK’s Quercus pulls plug on $570 mln Iran solar plant as sanctions bite

  • Quercus said it will halt the construction of a 500 million euro ($570 million) solar power plant in Iran
  • Iran has been trying to increase the share of renewable-produced electricity in its energy mix

OSLO: A British renewable energy investor Quercus said it will halt the construction of a 500 million euro ($570 million) solar power plant in Iran due to recently imposed US sanctions on Tehran.
The solar plant in Iran would have been the first renewable energy investment outside Europe by Quercus and the world’s sixth largest, with a 600 megawatt (MW) capacity.
Iran has been trying to increase the share of renewable-produced electricity in its energy mix, partly due to air pollution and to meet international commitments, hoping to have about 5 gigawatt in renewables installed by 2022.
In June, before the US-imposed sanctions, more than 250 companies had signed agreements to add and sell power from about 4 gigawatt of new renewables in the country, which has only 602 MW installed, Iranian energy ministry data showed.
Washington reimposed sanctions last week after pulling out of a 2015 international deal aimed at curbing Iran’s nuclear program in return for an easing of economic sanctions.
US president Donald Trump has also threatened to penalize companies that continue to operate in Iran, which led banks and many companies around the world to scale back their dealings with Tehran.
“Following the US sanctions on Iran, we have decided to cease all activities in the country, including our 600 MW project. We will continue to monitor the situation closely,” Quercus chief executive Diego Biasi said in an email on Tuesday.
The firm will continue to monitor the situation closely, said Biasi, who declined to comment further.
Last year Quercus said it would set up a project company and sell shares via a private placement after attracting interest from private and institutional investors, including sovereign wealth funds.
Construction was expected to take three years, with each 100 MW standalone lot becoming operational and connecting to the grid every six months.

SANCTIONS BITE
Independently-owned Quercus has a portfolio of around 28 renewable energy plants and 235 MW of installed capacity.
The firm, founded by Biasi and Simone Borla in 2010, controls five investment funds and has a network of “highly regarded external partners,” it says on its website.
The 600 MW plant it aimed to construct in Iran would be the firm’s largest investment. Quercus declined to comment on the details of its decision to cease the plan and on any financial losses that could result from it.
Fearing the consequences of the US embargo, a string of European companies have recently announced they would scale back their business in Iran.
On Tuesday, German engineering group Bilfinger, said it did not plan to sign any new business in the country, while automotive supplier Duerr on Aug. 11 said it had halted activities in Iran.
Another project, planned by Norway’s Saga Energy, which said last October it aimed to build 2 GW of new solar energy capacity in Iran and to start construction by the end of 2018, has also stalled.
Saga Energy’s chief of operations Rune Haaland told Reuters it was still working on getting the funding, which is more complicated since recent developments, and although it aimed to push on with its plans, construction could be delayed. ($1 = 0.8773 euros)