Abraaj Holdings along with its unit Abraaj Investment Management Limited (AIML) has reached an agreement with Colony Capital, a leading global real estate and investment management firm, on the sale of four of its leading emerging markets funds days after the troubled Dubai-based investor launched a court-supervised restructuring.
Colony’s deal comes after other investors such as Cerberus Capital Management had also made offers for the Abraaj business before it filed for provisional liquidation in the Cayman Islands.
The sale is part of a provisional liquidation and restructuring as set out in a court order.
Under this deal, the US-based Colony Capital, through the joint provisional liquidators - PricewaterhouseCoopers and Deloitte - appointed earlier this week by a Cayman court, will buy Abraaj’s Latin America, Sub Saharan Africa, North Africa and Turkey funds management business, the companies said in a statement on Thursday.
The deal includes Abraaj’s investment stakes in these funds, as well as staff in eight offices being transferred to Colony, it stated.
Abraaj, which was founded in 2002 by Arif Naqvi, emerged to become a leading private equity investor in growth markets with a regional footprint spanning Latin America to South East Asia.
The Group has investments which include a portfolio of mature businesses covering diverse sectors including financial services, FMCG, industrials, healthcare, education, manufacturing and logistics.
The agreement comes after months of turmoil at Abraaj in the wake of its dispute with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp (IFC), over the use of their money in a $1 billion healthcare fund. The group has denied it misused the funds.
A leading global investment management firm, Colony has significant holdings in the healthcare, industrial and hospitality sectors, in addition to other private equity and debt investments, with an embedded institutional and retail investment management business. It was founded by Thomas J. Barrack, Jr. in 1991.
Colony has also agreed to oversee, on an interim basis, other group funds that are not being acquired so that the Abraaj and all its stakeholders have a comprehensive global solution in place.
The agreement has received in principle regulatory nod and is expected to close upon approval from the Grand Court of the Cayman Islands as well as other customary consents. The transaction is expected to be completed by July 1, it stated.
On the deal, Tom Barrack, the executive chairman of Colony Capital, said: "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 the Dubai group over the last months."
Abraaj has launched a restructuring plan for $1bn in debts owed to creditors, seeking to sell off assets over time to repay creditors, most of which have agreed to a standstill.
On the new development, Naqvi said: "The appointment of the joint provisional liquidators and the start of the process of restructuring this business that we operated across diverse markets is a moment of introspection, but also one of satisfaction, knowing that the teams that have been nurtured over the years and the businesses that we were proud to invest in now have a clearly defined future and a good home that will become the custodians of the next phase of this journey."
Selcuk Yorgancioglu and Omar Lodhi, the co-chief executives of AIML, said: "We are pleased to join the Colony platform and team which allows us to continue building our businesses in the fast-growing markets that we have been committed to for over two decades."
Michael Jervis, the partner at PricewaterhouseCoopers and joint provisional liquidator of Abraaj Holdings, said: "This is an important milestone towards achieving the overall objectives of the Provisional Liquidation and restructuring as set out in the Court Order. We shall be consulting with our creditors in the coming days on this planned transaction prior to seeking the approval of court."
Stuart Sybersma, the partner at Deloitte and joint provisional liquidator of AIML said: "We are pleased to have agreed a sale of certain of AIML's business units and assets in such a short timeframe, allowing, in line with our restructuring mandate, for these business units to continue to trade and ensuring continuity of service to investors and employment for the members of staff employed in these regions."
"The next step is to seek sanction of the Cayman Islands Court for the transaction, which will be undertaken on an expedited basis," he added.-TradeArabia News Service