Dubai-based Mashreq says its second quarter net income climbed 5.4 per cent. Reuters
Dubai-based Mashreq says its second quarter net income climbed 5.4 per cent. Reuters
Dubai-based Mashreq says its second quarter net income climbed 5.4 per cent. Reuters
Dubai-based Mashreq says its second quarter net income climbed 5.4 per cent. Reuters

Dubai lenders Mashreq, CBD join FAB in declaring Abraaj exposure


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Commercial Bank of Dubai and Mashreq Bank are the latest lenders to disclose their exposure to embattled private equity firm Abraaj Group that is reeling under allegations of misusing investors funds.

Dubai-headquartered CBD has $166.25m (Dh611.8m) worth of exposure to the buyout firm through “secure credit facilities," it said on Thursday in a statement to Dubai Financial Market. Mashreq owns 16.7 million shares in Abraaj Holding valued at Dh66.03m, the lender said in a separate statement to the bourse. The bank also holds 12.5 million shares in Menasa Capital Holding, a Dubai International Financial Centre subsidiary of Abraaj, worth Dh459,125, it said.

"Based on the disclosures made so far, it seems that for most banks the impact is manageable," Shabbir Malik, banking analyst at EFG-Hermes, said. "For Mashreq and most banks who disclosed exposure to Abraaj, there should not be a material impact on their profitability."

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Read more:

Abraaj founder Naqvi to skip hearing to avoid possible arrest

Abraaj founder Naqvi faces UAE court ruling over bounced cheque

Abraaj restructuring request approved by Cayman Islands court

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Mashreq and CBD's disclosures to the market follow Shuaa Capital and Ajman Bank’s announcements on Wednesday. Shuaa and its clients hold a 3.6 per cent stake collectively worth $8.83m in The Abraaj Buyout Fund II. Ajman Bank said it has no direct exposure but is involved in a syndicated funding to Stanford Marine, a company that is 51 per cent owned by Abraaj Capital. Analysts said the size of the banks' exposure relative to the size of their loan books meant there is little material impact on the lenders.

Oman Insurance Company has an exposure of Dh19.7m through an investment in Abraaj property fund ASAS, it said on Thursday in a statement to the DFM. ASAS is an income-generating, shariah-compliant real estate fund, according to Abraaj's website.

The UAE markets did not see a major loss in value in reaction to the multiple disclosures, with the DFM and ADX falling 0.28 per cent and 0.1 per cent respectively by the end of trading.

The market reaction is "justifiably muted" given that the banks' exposure to Abraaj is limited, Khalid Howladar, managing director of Dubai-based credit advisory firm Acreditus, said.

"The main fallout of the event is the international investor perception around governance, transparency and accounting quality," he said. "This will make fund-raising harder for local private equity firms."
The Abraaj fallout is an opportunity for the sector to become more transparent, Richard Segal, senior emerging market analyst at Manulife, said.

"This means a lot more due diligence and internal controls to ensure funds cannot be co-mingled and greater separation between owners and senior management of a private equity fund company, and those deploying the capital into the individual investments," he said.

The Dubai-listed financial institutions join companies such as First Abu Dhabi Bank, Air Arabia and Union Arab Bank in reporting to the market their exposure to Abraaj, which is undergoing a court-supervised restructuring.

FAB on Tuesday said it has direct exposure to the buyout firm through a fully secured three-year $21.4m loan maturing in April. Sharjah-based budget airline said last month it has an exposure of $336m to Abraaj through fund portfolios and short-term investments.

On Thursday prior to the start of market trading Emaar Malls, Arabtec, Dubai Refreshment, Dubai Investments, Tabreed, Ascana, Deyaar, Mazaya and the Dubai Financial Market said they had no exposure to the private equity firm.  After market close, Dubai-based retailer Marka, Emirates Islamic Bank and insurance company Dar Al Takaful also said they had no exposure to Abraaj.

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RS Leipzig 3 

Marcel Sabitzer 10', 21'

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Omar Yabroudi's factfile

Born: October 20, 1989, Sharjah

Education: Bachelor of Science and Football, Liverpool John Moores University

2010: Accrington Stanley FC, internship

2010-2012: Crystal Palace, performance analyst with U-18 academy

2012-2015: Barnet FC, first-team performance analyst/head of recruitment

2015-2017: Nottingham Forest, head of recruitment

2018-present: Crystal Palace, player recruitment manager

 

 

 

 

Salah in numbers

€39 million: Liverpool agreed a fee, including add-ons, in the region of 39m (nearly Dh176m) to sign Salah from Roma last year. The exchange rate at the time meant that cost the Reds £34.3m - a bargain given his performances since.

13: The 25-year-old player was not a complete stranger to the Premier League when he arrived at Liverpool this summer. However, during his previous stint at Chelsea, he made just 13 Premier League appearances, seven of which were off the bench, and scored only twice.

57: It was in the 57th minute of his Liverpool bow when Salah opened his account for the Reds in the 3-3 draw with Watford back in August. The Egyptian prodded the ball over the line from close range after latching onto Roberto Firmino's attempted lob.

7: Salah's best scoring streak of the season occurred between an FA Cup tie against West Brom on January 27 and a Premier League win over Newcastle on March 3. He scored for seven games running in all competitions and struck twice against Tottenham.

3: This season Salah became the first player in Premier League history to win the player of the month award three times during a term. He was voted as the division's best player in November, February and March.

40: Salah joined Roger Hunt and Ian Rush as the only players in Liverpool's history to have scored 40 times in a single season when he headed home against Bournemouth at Anfield earlier this month.

30: The goal against Bournemouth ensured the Egyptian achieved another milestone in becoming the first African player to score 30 times across one Premier League campaign.

8: As well as his fine form in England, Salah has also scored eight times in the tournament phase of this season's Champions League. Only Real Madrid's Cristiano Ronaldo, with 15 to his credit, has found the net more often in the group stages and knockout rounds of Europe's premier club competition.

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