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Monday, 16 July 2018

Actis looks to buy Abraaj Group’s 95% stake in Nahda University

M&A WATCH- Global private equity firm Actis is reportedly in early talks to acquire Abraaj Group’s 95% stake in Nahda University, sources close to the matter tell Al Mal. The transaction would not be finalized until after Abraaj completes its court ordered restructuring and liquidation, as decision-making at the UAE-headquartered firm is on hold until then, according to the newspaper. Its sources add that Matouk Bassiouny has been tapped as sellside advisor, while Zaki Hashem is advising Actis.

Emirati court dismisses charges against Abraaj founder: Meanwhile, a UAE court dismissed criminal charges against Abraaj founder Arif Naqvi and firm executive Muhammad Rafique Lakhani for bouncing checks, Reuters reports. The dismissal comes after the claimant dropped the charges, the judge said. The dismissal offers some relief to the beleaguered PE outfit, which is trying to sell its investment management business after filing for provisional liquidation last month. It is estimated that the firm owes more than USD 1 bn.

On that front, PwC highlights Abraaj’s “unstable” business model and bad accounting: PricewaterhouseCoopers — which along with Deloitte was hired to act as provisional liquidators — called out Abraaj’s “unusual” business model reliant on short-term borrowing and missing key financial statements in a report seen by Bloomberg. The confidential report noted “multiple layers of leverage” as the company borrowed to offset a “long-running liquidity shortfall between the investment management fees and operating expenses.” In simple terms: Abraaj was living beyond its means.

Where was the board of directors? PwC also reportedly said it has “been unable to obtain standalone annual financial statements or management accounts for the company. … This lack of financial record-keeping raised the question of how the company’s directors were able to ensure that the company was solvent and being effectively managed.”

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