Dubai – Mubasher: Abraaj Holdings’ business model is unusually reliant on short-term loans, according to a report conducted by PricewaterhouseCoopers (PwC).
Substantial financial statements of the ailing private equity firm are missing, while others were not even prepared, the report, released by Bloomberg News, found.
The troubled Emirati company has been borrowing to cover shortfalls in liquidity, which is an “unusual practice” that weakened its business model, PwC added.
“PwC said that under Cayman rules, companies like Abraaj, which was founded by Pakistani executive Arif Naqvi in 2002, do not need to file standalone financials, but it’s ‘highly irregular’ for such a firm not to do so,” Bloomberg reported.
Both Abraaj and PwC declined to give a comment.
Abraaj’s troubles began after allegations of money misuse in its $1 billion healthcare fund. In June, the Dubai-based investment firm filed for bankruptcy. It is reportedly undergoing a mega-restructuring plan.
Since June, hosts of companies, particularly in the UAE, have disclosed their exposure to Abraaj. Such companies included Air Arabia’s AED 1.2 billion exposure, Al Qudra Investments, and Commercial Bank of Dubai (CBD).
Analysts previously told Mubasher that companies’ disclosures of the level of their exposure to Abraaj would boost investor confidence in the markets.
“This lack of financial record-keeping raised the question of how the company’s directors were able to ensure that the company was solvent and being effectively managed,” the report revealed.
