DUBAI
Lenders to Dubai-based private equity firm Abraaj are seeking advice from law firm Clifford Chance on potential action they could take against the firm as concerns grow about its ability to repay its debt, two sources close to the matter said.
Abraaj, the Middle East and Africa’s biggest private equity fund, is experiencing cash flow pressures, said the sources, as it faces an investigation by some investors into how it used some of their money in a $1 billion health care fund.
Abraaj, which has denied any wrongdoing, said in a statement emailed to Reuters it is working constructively with creditors to resolve outstanding obligations. “We can advise that a collaborative position has been adopted by Abraaj and its bankers to resolve matters in an orderly process and to the satisfaction of concerned parties,” the firm said without elaborating.
The sources said a group of banks including Societe Generale, Mashreq, Noor Bank and Commercial Bank of Dubai, which provided money to Abraaj on a bilateral basis under secured loans, are seeking advice from Clifford Chance on measures they could take, such as giving Abraaj time to dispose of assets.
Noor Bank, Societe Generale and Clifford Chance declined to comment. The other banks did not respond to requests for comment.
Abraaj had managed $13.6 billion before it decided earlier this year to return $3 billion to investors and put a new $6 billion fund on hold.
Abraaj is locked in a row with investors over allegations it misused money in the health care fund and has been considering selling some or all of its investment management business.
This would help raise cash which along with proceeds from the planned sale of its stake in Pakistani utility K-Electric would ease cash flow pressures that have seen Abraaj violate some of its debt covenants, sources previously told Reuters.
