Abraaj offloads entire Orascom stake for $52m

Firm has been under pressure since February when some of its investors commissioned an audit to into how money was used in its healthcare fund

An Orascom construction worker looks on at Egypt's new administrative capital, north of Cairo. Dubai's Abraaj Group has sold its entire stake in the company. Amr Abdallah Dalsh/Reuters

Dubai-based Abraaj Group sold its entire stake in Egypt’s Orascom Construction as the private equity firm seeks to restructure amid allegations of misused funds.

The company sold its 5.4 percent holding in Orascom Construction at $8.30 per share, according to a statement on Nasdaq Dubai. The value of the stake is $52 million.

Abraaj has been under pressure since February when some of its investors commissioned an audit to investigate the alleged mismanagement of money in its health-care fund. Kuwait’s Public Institution for Social Security last week filed a petition for the liquidation of the holding firm, Bloomberg said.

The buyout firm, which once managed almost $14 billion for institutions and supranational agencies from the US, UK and other countries, faces growing concerns about its viability and impending loan repayments.

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On Wednesday, Reuters reported that Abraaj has started legal proceedings in the Cayman Islands seeking the restructuring of the private equity firm’s liabilities.

Auctus is the second creditor, after Kuwait's Public Institution for Social Security (PIFSS), to start legal action in the Cayman Islands, where Abraaj Holdings is registered.

In a statement to Reuters from its representatives, legal firm Kobre & Kim, Auctus Fund said it has filed an application that seeks the appointment of "court-approved professionals in the Cayman Islands" to manage the restructuring process.

Auctus said it holds a large credit position in Abraaj Holdings and its investment arm, Abraaj Investment Management Limited.

The moves by the two creditors come amid Abraaj's own plan to file for provisional liquidation in the Cayman Islands before a hearing on a petition to wind up a company.

This followed the Kuwaiti fund's refusal this month to agree to a proposed debt freeze, complicating Abraaj's efforts to sell its investment management business to New York-based Cerberus Capital Management.

Abraaj declined to comment.