Abraaj investors hire Alvarez & Marsal to help recover $99 million in debt

07 August 2018 Consultancy-me.com 3 min. read

Leading forensics and restructuring firm Alvarez & Marsal has been brought in by investors in the embattled Abraaj Group to help recover nearly $100 million in outstanding debt, as the long-running saga draws closer to its sorry conclusion.

Following an initial investigation triggered by complaints from high-profile investors late last year over alleged mismanagement of its $1 billion emerging market healthcare fund, and months of subsequent scrambling, the once high-flying Abraaj group finally filed for voluntary liquidation in the Cayman Islands courts in June under the sustained pressure.

And now, as the private equity fund’s court-appointed liquidators PwC and Deloitte work to settle over a $1 billion worth of debt in the wake of the Abraaj collapse – which was found in a Deloitte audit to have commingled roughly $95 million in finances – the fund’s disgruntled investors have reportedly hired disputes & investigations specialist Alvarez & Marsal (A&M) to help recover the money.

While A&M has yet to comment, the firm has according to unnamed sources been reportedly brought in by investors to help recover $99 million in debt, with an investor committee having been formed and led by Boston-based HarbourVest Partners (which has also declined to comment). A&M will also provide representation for Abraaj if elected to a liquidators’ committee for the group’s asset management business.Abraaj investors hire Alvarez & Marsal to help recover $99 million in debtA&M joins a growing list of external advisories drawn into the ongoing matter, with Ankura Consulting earlier tapped by the initial group of unsatisfied investors – including the Bill and Melinda Gates Foundation and the World Bank’s International Finance Corporation – to conduct a forensic investigation into Abraaj books following the rejection of an original KPMG audit exonerating the buy-out firm of any wrong-doing.

And other firms may yet join the fray. According to the most recent reports, the sources, said to be familiar with the matter, indicated that further large creditors may also join the liquidators’ committee, including Grant Thornton in representation for Hamid Jafar, who is again pursuing criminal proceedings against Abraaj founder Arif Naqvi for issuing bounced cheques in relation to up to $300 million in private loans.

Since being appointed by the court as a provisional liquidators alongside Deloitte, PwC in its first report filing noted further irregularities with the fund’s management, stating that it had been “unable to obtain standalone annual financial statements and management accounts for the company,” with the company’s multiple layers of leverage in borrowing described as an “unusual practice for a structure operating in a private equity capacity.”

It is unclear based on the most recent reports whether A&M’s representation for investors will be conducted via its US or Middle Eastern arms or a coordination of both. In recent months, the Middle East branch of A&M has been beefing up its leadership and expertise in the region with several key appointments, including experienced multijurisdictional investigator Ghazanfar Shah as Senior Director in its local Disputes and Investigations practice.