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.
Red Joan
Director: Trevor Nunn
Starring: Judi Dench, Sophie Cookson, Tereza Srbova
Rating: 3/5 stars
How to protect yourself when air quality drops
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'Young girls thinking of big ideas'
Words come easy for aspiring writer Afra Al Muhairb. The business side of books, on the other hand, is entirely foreign to the 16-year-old Emirati. So, she followed her father’s advice and enroled in the Abu Dhabi Education Council’s summer entrepreneurship course at Abu Dhabi University hoping to pick up a few new skills.
“Most of us have this dream of opening a business,” said Afra, referring to her peers are “young girls thinking of big ideas.”
In the three-week class, pupils are challenged to come up with a business and develop an operational and marketing plan to support their idea. But, the learning goes far beyond sales and branding, said teacher Sonia Elhaj.
“It’s not only about starting up a business, it’s all the meta skills that goes with it -- building self confidence, communication,” said Ms Elhaj. “It’s a way to coach them and to harness ideas and to allow them to be creative. They are really hungry to do this and be heard. They are so happy to be actually doing something, to be engaged in creating something new, not only sitting and listening and getting new information and new knowledge. Now they are applying that knowledge.”
Afra’s team decided to focus their business idea on a restaurant modelled after the Leaning Tower of Pisa. Each level would have a different international cuisine and all the meat would be halal. The pupils thought of this after discussing a common problem they face when travelling abroad.
“Sometimes we find the struggle of finding halal food, so we just eat fish and cheese, so it’s hard for us to spend 20 days with fish and cheese,” said Afra. “So we made this tower so every person who comes – from Africa, from America – they will find the right food to eat.”
rpennington@thenational.ae
Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
COMPANY%20PROFILE
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Start-up hopes to end Japan's love affair with cash
Across most of Asia, people pay for taxi rides, restaurant meals and merchandise with smartphone-readable barcodes — except in Japan, where cash still rules. Now, as the country’s biggest web companies race to dominate the payments market, one Tokyo-based startup says it has a fighting chance to win with its QR app.
Origami had a head start when it introduced a QR-code payment service in late 2015 and has since signed up fast-food chain KFC, Tokyo’s largest cab company Nihon Kotsu and convenience store operator Lawson. The company raised $66 million in September to expand nationwide and plans to more than double its staff of about 100 employees, says founder Yoshiki Yasui.
Origami is betting that stores, which until now relied on direct mail and email newsletters, will pay for the ability to reach customers on their smartphones. For example, a hair salon using Origami’s payment app would be able to send a message to past customers with a coupon for their next haircut.
Quick Response codes, the dotted squares that can be read by smartphone cameras, were invented in the 1990s by a unit of Toyota Motor to track automotive parts. But when the Japanese pioneered digital payments almost two decades ago with contactless cards for train fares, they chose the so-called near-field communications technology. The high cost of rolling out NFC payments, convenient ATMs and a culture where lost wallets are often returned have all been cited as reasons why cash remains king in the archipelago. In China, however, QR codes dominate.
Cashless payments, which includes credit cards, accounted for just 20 per cent of total consumer spending in Japan during 2016, compared with 60 per cent in China and 89 per cent in South Korea, according to a report by the Bank of Japan.
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