The recent filing for provisional liquidation by Aureous Africa Fund LLC (Abraaj Group), is set to trigger a massive sell-off in its stake in some Nigerian companies.
Recall that the Middle East’s biggest private equity firm, recently filed a petition in the Cayman Islands, asking the court to appoint PwC as provisional liquidators for the company.
The request has however been granted by the court with the appointment of executives from PwC as joint provisional liquidators of Abraaj Holdings and executives from Deloitte for the same role at the asset management arm, Abraaj Investment Management Limited.
This will pave the way for a court-supervised restructuring of the holding company and also protect Abraaj, which emerged as one of the world’s largest emerging markets investors, from creditor action against defaults.
According to Reuters, in recent times there have been complaints by several investors such as the Auctus fund, Bill & Melinda Gates Foundation and International Finance Corp (IFC), over how it used their money in a $1 billion healthcare fund. A claim Abraaj has vehemently denied.
Reacting to the court ruling which appointed liquidators for the company, Abraaj’s founder, Arif Naqvi, noted that the ruling marks the culmination of an extremely complex and challenging phase of negotiations and detailed planning.
In his words:
“Since our differences with certain investors first came to light, we have worked exhaustively and transparently to investigate the matter and address their concerns, all the while ensuring our tremendous investment teams around the world continue to support the growth of our partner companies.”
Reports from Bloomberg also said that Colony Capital Inc. has agreed to buy some of Abraaj Group’s key funds and oversee others.
Abraaj has been selling assets to raise liquidity and has also been in talks to sell its asset-management division to willing buyers.
According to reports from the National, Abraaj has sold its entire stake in Orascom Construction (an Egypt based construction firm). The company was reported to have 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.
Ripple effect on Nigeria companies.
Abraaj also has some stake in some listed Nigerian companies such as C & I Leasing Plc, CWG Plc, Custodian and Allied Insurance, others include Eleme Fertilizers, Mouka Foam Limited, Bridge Clinic, Therapia Health Limited, and AOS Orwell Limited.
Recall that Abraaj had invested both in Mouka foam and Eleme Fertilizer under its Sub-Saharan Africa fund III in 2015 and 2016 respectively. It also has 517,576,289 units of shares in CWG Plc, this represents 20.25% stake in the Information Technology company, its stake also in Custodian & Allied Insurance Plc amounts to 348,027,267 units of shares.
There is a possibility that the company may also decide to sell its stake in some of these companies. If it decides to sell, then there will be an increase in the volume of traded shares of these mentioned companies.