UAE: Air Arabia Total Exposure To Abraaj Group Is Only $336m

Sharjah low-cost carrier Air Arabia said on Wednesday its overall exposure of $336 million to ailing private equity firm Abraaj Group has no significant impact on the airline's operations or cash flow.

We would like to emphasise that there is no significant impact on Air Arabia’s daily or future business or on its liquidity status and the business is operating as usual, a spokeswoman for Air Arabia said.

The $336m exposure is through fund portfolios and short-term investments. Further updates on the matter will be made as and when available, the statement added.

On Tuesday, the Grand Court of the Cayman Islands approved Abraaj’s application for a court supervised restructuring, enabling the buyout firm to re-order its liabilities and pursue the sale of its funds management business in the interest of the majority of stakeholders.

Air Arabia’s statement added that the carrier has, like other Abraaj creditors, appointed a party to represent its interests in court while the provisional liquidation is carried out.

Air Arabia’s stock price fell by more than 7 per cent on Monday amid news of its investment in Abraaj. Its share price continued to slide on Tuesday, although it ended the day flat. The stock continued to fluctuate on Wednesday and closed down 0.95 per cent.

As part of the Air Arabia Group investment portfolio, the carrier has an investment in Abraaj funds, an Air Arabia spokeswoman said in a statement on Monday.

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 spokeswoman declined to say whether selling the stake in Abraaj is one option being explored, and Abraaj on Monday declined to comment on its connection with Air Arabia.

The Middle East’s biggest private equity company, which at its peak had more than $13.6 billion of assets under management, is facing allegations that it misused funds in a healthcare investment vehicle.

The $1bn Abraaj Growth Markets Health Fund deployed capital from investors including the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation, the UK’s CDC Group and Proparco Group of France.

These four out of a total 24 investors requested an audit of the health fund and engaged Ankura Consulting to find out what had happened to some of the money invested in the fund, according to an Abraaj spokesman. Abraaj denies any wrongdoing.

In its statement on Tuesday, Abraaj said the Cayman court also approved a request for a provisional liquidation of Abraaj’s fund management business, which Abraaj has been hoping to sell this year along with its stakes in other companies to resolve liquidity issues.

Air Arabia posted a 5 per cent rise in net profit for the first quarter of 2018, beating analysts' forecasts, on the back of strong demand and cost reduction.


Tourism Observer

UAE: Uber Rival Careem Gets $60M Funding Injection

The third round of funding for Careem represents one of the largest investments in the region’s emerging technology sector.

Dubai-based car services start-up Careem has received a new round of funding worth $60m from a group of investors led by the Abraaj Group, it was announced on Tuesday.

The Series C investment represents one of the largest investments in the region’s emerging technology sector, a statement said.

Careem said it will use the funding to invest in further growth and expansion in the Middle East, North Africa and South Asia by introducing key new hires, accelerating its pace of entry into new markets, and developing new products and services.

The investment marks the third round of fundraising by Careem. Along with Abraaj, other investors in the company include Al Tayyar, STC Ventures, Beco Capital, Impulse (a subsidiary of Kuwait Investment Authority), Lumia Capital and Wamda Capital.

Al Tayyar remains the largest institutional investor in Careem.

Founded in Dubai in 2012, Careem currently operates in 20 cities across the MENA region and Pakistan.

In the last three years, the company has seen month-on-month growth of over 30 per cent across its core markets of the United Arab Emirates, Saudi Arabia and Egypt.

It now aims to become the biggest consumer logistics business in the region.

Partner at Abraaj Mustafa Abdel-Wadood said: “The transport industry is witnessing a positive disruptive revolution from the use of technology. The headroom for growth in the ride-share and taxi-app industry continues to be substantial and is proving out globally – and with our markets being no exception.

“We strongly believe that the combination of Careem and its management team with Abraaj will drive scale, efficiency, and produce significant public policy benefits. We intend to equip this business fully to rise to the challenge – and take leadership of this segment,” he added.

Careem’s expansion comes even as its global rival Uber has announced plans to grow its presence in the MENA region.

Last week, the company – which operates in 13 cities across the MENA – revealed that it will invest $250m into the region to boost its presence in local markets.