Dubai: Air Arabia’s share prices plunged over 7 per cent on Monday, reaching their lowest level in 11 months as the carrier confirmed it has investments with Abraaj, the private equity group that filed for liquidation.
Air Arabia was the most actively traded stock on the Dubai Financial Market (DFM), with its shares accounting for 20 per cent of the market’s total traded values. It saw the steepest losses of the day even as other stocks sank.
The decline came amid concerns about Air Arabia’s exposure to Abraaj, which on Thursday filed for provisional liquidation in the Cayman Islands.
A spokesperson for Air Arabia confirmed that the carrier “has an investment in Abraaj funds” and that that was part of the Air Arabia Group investment portfolio.
The founder of Abraaj, Arif Naqvi, also serves as a board member at Air Arabia.
“Air Arabia has appointed a team of experts who are actively engaged with all stakeholders and creditors involved with the matter to ensure Air Arabia’s investment and business interest is protected,” the spokesperson said.
The Sharjah-based carrier did not provide details on the size of its investment or how and whether it plans to pull out of it.
When it filed for liquidation, Abraaj asked the court to appoint PwC as provisional liquidators, saying that the move will “[allow] time for a proposal to be put to creditors for the orderly restructuring of the company.”
The filing follows legal action against Abraaj by the Kuwait Public Institution for Social Security and another creditor who are seeking the liquidation and winding up of Abraaj for non-payment of debt.
Abraaj, which once managed almost $14 billion (Dh51.4 billion) for institutions and other agencies, is now facing growing concerns about its viability. Nearly five months ago, some of its investors, including the Bill and Melinda Gates Foundation, commissioned an audit to investigate the alleged mismanagement of money in Abraaj’s $1 billion health care fund.
The company, the Middle East and North Africa’s largest private equity firm, has denied that it misused funds.
“We are investigating this, and we are in contact with [the] DIFC [Dubai International Financial Centre] to see where the national investor is affected. Once we have tangible evidence, we can move forward with this in coordination with federal and local governments,” said Obaid Al Za’abi, SCA chief executive officer.
— With additional inputs from Reuters and Bloomberg