Tom Barrack, CEO of Colony Capital, addresses the final night of the Republican National Convention at Quicken Loans Arena in Cleveland, Ohio, July 21, 2016. / AFP PHOTO / Robyn BECK
Tom Barrack, CEO of Colony Capital - his firm is said to be among six companies in contention to manage Abraaj $1bn healthcare fund. AFP

What exactly is going on at Dubai private equity firm Abraaj



In February, reports emerged that some of the 24 high-profile investors in a $1 billion healthcare fund owned by Abraaj Holdings had initiated an investigation, suspecting misuse of hundreds of millions of dollars of their money.

The Abraaj Growth Markets Health Fund deployed capital from investors including the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation, the UK’s CDC Group and Proparco Group of France.

These four requested an audit of the health fund and engaged Ankura Consulting to find out what had happened to some of the money invested in the vehicle.

All along, Abraaj, and its Pakistan-born founder Arif Naqvi, have denied any wrongdoing. The saga has, however, roiled the region's private equity markets due to the vast pool of stakeholders with exposure to Abraaj, ranging from low-cost carrier Air Arabia to Kuwait's Public Institution for Social Security. Creditors have sought liquidation of the firm and its assets in efforts to recover their funds in the wake of the allegations.

Timeline of the main events

Feb 2: The New York Times and The Wall Street Journal run articles revealing the investigation into the alleged misappropriation of funds in the $1bn healthcare fund.

Feb 4: Abraaj issues a statement denying any misappropriation of funds, and dismissing the media report as "inaccurate and misleading." It also says it has hired auditing firm KPMG to investigate the matter.

Feb 8: Abraaj says the KPMG review found no evidence of misuse of funds

Feb 23: Abraaj says Mr Naqvi has relinquished control of the firm's fund management business but will remain CEO of the holding company. Omar Lodhi and Selcuk Yorgancioglu, the two partners with the firm, have been promoted as co-chief executives of the fund management business, Abraaj Investment Management Limited, which will have an independent board of directors.

March 30: Reports that Abraaj is cutting nearly 15 per cent of its total workforce of about 350 people.

April 15: Abraaj said to have hired auditing firm Deloitte to examine its business, including the healthcare fund after investors questioned the earlier review by KPMG.

May 7: Abraaj reportedly in talks to sell a majority stake in its fund management unit to US asset manager Colony NorthStar to help stabilise the business.

May 19: Bloomberg reports that the alleged misuse of funds went beyond the $1 billion healthcare fund.

June 5: Abraaj says it expects to reach a deal with its secured creditors to freeze its debt.

June 7: Kuwait's Public Institution for Social Security, an unsecured creditor, says it has filed a petition in a Cayman Islands court seeking liquidation of Abraaj Holdings.

June 11: According to findings of a review by Deloitte show that Abraaj commingled about $95m after it faced cash shortages. There was no evidence found of any embezzlement or misappropriation.

June 15: Abraaj Holdings seeks a Cayman Islands court-supervised restructuring as the firm tries to re-order its liabilities and pursue the sale of its funds management business.

June 14: Egypt's Orascom Construction says Abraaj has offloaded its entire stake in the company for $52m.

June 19: Abraaj Group says a Cayman Islands court approved its request for a provisional liquidation of the business, enabling a court-supervised restructuring and protection of stakeholders' rights.

June 21: Abraaj says it has agreed to sell some of its key funds to Colony Capital of the US.

What does that deal mean for Abraaj, its staff, investments and investors?

Joint-liquidators Deloitte said the sale of the units and assets will mean continuity of trade, servicing of clients and employment of staff in the Latin America, Sub-Saharan Africa, North Africa and Turkey regions. Mr Naqvi said that this sale means 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". It also means that the court-ordered liquidation and restructuring of the group will proceed.

Who are Colony Capital?

Colony Capital is a US real estate and investment management firm which has $43bn of assets under management. Its founder and executive chairman is the Lebanese-American billionaire Tom Barrack, who is a close confidante of US president Donald Trump.

What next?

Abraaj will hope that the deal with Colony will end the saga as it moves ahead with liquidation. However, it is likely that the focus will now shift to how companies like Air Arabia were left exposed in such a way in the first place through investments with Abraaj.

MATCH INFO

World Cup qualifier

Thailand 2 (Dangda 26', Panya 51')

UAE 1 (Mabkhout 45+2')

MATCH SCHEDULE

Uefa Champions League semi-final, first leg
Tuesday, April 24 (10.45pm)

Liverpool v Roma

Wednesday, April 25
Bayern Munich v Real Madrid (10.45pm)

Europa League semi-final, first leg
Thursday, April 26

Arsenal v Atletico Madrid (11.05pm)
Marseille v Salzburg (11.05pm)

Brief scoreline:

Liverpool 2

Mane 51', Salah 53'

Chelsea 0

Man of the Match: Mohamed Salah (Liverpool)

Stamp duty timeline

December 2014: Former UK chancellor of the Exchequer George Osborne reforms stamp duty land tax (SDLT), replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:

Up to £125,000 – 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; More than £1.5m – 12%

April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.

July 2020: Chancellor Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.

March 2021: Mr Sunak extends the SDLT holiday at his March 3 budget until the end of June.

April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.

June 2021: SDLT holiday on transactions up to £500,000 expires on June 30.

July 2021: Tax break on transactions between £125,000 to £250,000 starts on July 1 and runs until September 30.

Seven Winters in Tehran

Director : Steffi Niederzoll

Starring: Reyhaneh Jabbari, Shole Pakravan, Zar Amir Ebrahimi

Rating: 4/5

A QUIET PLACE

Starring: Lupita Nyong'o, Joseph Quinn, Djimon Hounsou

Director: Michael Sarnoski

Rating: 4/5

EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE

Edinburgh: November 4 (unchanged)

Bahrain: November 15 (from September 15); second daily service from January 1

Kuwait: November 15 (from September 16)

Mumbai: January 1 (from October 27)

Ahmedabad: January 1 (from October 27)

Colombo: January 2 (from January 1)

Muscat: March 1 (from December 1)

Lyon: March 1 (from December 1)

Bologna: March 1 (from December 1)

Source: Emirates

How much of your income do you need to save?

The more you save, the sooner you can retire. Tuan Phan, a board member of SimplyFI.com, says if you save just 5 per cent of your salary, you can expect to work for another 66 years before you are able to retire without too large a drop in income.

In other words, you will not save enough to retire comfortably. If you save 15 per cent, you can forward to another 43 working years. Up that to 40 per cent of your income, and your remaining working life drops to just 22 years. (see table)

Obviously, this is only a rough guide. How much you save will depend on variables, not least your salary and how much you already have in your pension pot. But it shows what you need to do to achieve financial independence.

 

Company profile

Name: Tabby
Founded: August 2019; platform went live in February 2020
Founder/CEO: Hosam Arab, co-founder: Daniil Barkalov
Based: Dubai, UAE
Sector: Payments
Size: 40-50 employees
Stage: Series A
Investors: Arbor Ventures, Mubadala Capital, Wamda Capital, STV, Raed Ventures, Global Founders Capital, JIMCO, Global Ventures, Venture Souq, Outliers VC, MSA Capital, HOF and AB Accelerator.


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