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Private Equity

Abraaj Holdings said to plan filing for provisional liquidation

Abraaj Holdings, once one of the developing world's most influential investors, plans to file for provisional liquidation in the Cayman Islands as early as this week as it battles allegations of misused funds, according to people with knowledge of the matter.

The Dubai-based investment firm plans to file before June 29 when a court hearing of a petition to liquidate Abraaj Holdings by Kuwait's Public Institution for Social Security is scheduled, the people said, asking not to be identified because the matter is private. No final decisions have been taken on the timing for the filing, the people said.

A court-supervised provisional liquidation would allow Abraaj to restructure debt, negotiate with creditors and sell assets, the people said. It would also allow a moratorium on the holding company's unsecured claims, they said.

The interest of investors, creditors and broader stakeholders "is paramount and we keep these constituents front of mind as we responsibly explore effective options to maintain the stability and continuity of the firm," Abraaj said in an emailed statement. The company is "continuing to work intensively and collaboratively with all of its stakeholders to resolve outstanding obligations."

Abraaj, which once managed almost $14 billion for institutions and supranational agencies from the U.S., U.K. and other countries, faces growing concerns about its viability and impending loan repayments. The company has been under pressure since February when some of its investors commissioned an audit to investigate the alleged mismanagement of money in its health-care fund.

Kuwait's PIFSS said last week it filed a petition for the liquidation and winding up of Abraaj Holdings after it defaulted on a $100 million loan that was due on June 3. The fund holds a stake in Abraaj Holdings and had provided $731.8 million in loans and investments by 2013, it said. Since then, it has got back $346.2 million.

Abraaj has been selling assets to raise liquidity and has also been in talks to sell its asset management division. Societe Generale and Mashreqbank are also creditors to the private equity firm, according to people familiar with the matter.