The rise and fall of Dubai’s Abraaj Group

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It will be small comfort for the founder of The Abraaj Group that HM Prison Wandsworth now serves a choice of cereals with milk for breakfast rather than plain porridge.

Arif Naqvi, the man behind the world’s largest private equity insolvency case, was arrested at Heathrow Airport on April 10 on charges of defrauding US investors, including the Bill & Melinda Gates Foundation.

Inside a 10ft by 6ft cell with pale yellow walls, the once respected Dubai tycoon awaits possible extradition to the United States.

The bleak surroundings of the UK’s largest jail – famous for housing Britain’s “most violent prisoner” Charles Bronson and organised crime leader Ronnie Kray – are a far cry from the swanky environs of Naqvi’s sprawling luxury properties dotted across London’s Knightsbridge, Oxfordshire, Bedfordshire and Dubai’s Jumeirah.

Hard to believe that just 12 months earlier, this was the same prized leader of the firm that at one point managed $14bn in assets and was often pictured shaking hands and sharing stages with the likes of Bill Clinton, Richard Branson and Bill Gates.

Known for his silver tongue and fearless attitude, Naqvi came into the private equity industry “by accident” when he quit what he called a “prestigious” Saudi business. The reason?

“One day I just went to my boss and said, ‘I want to leave.’ And he said, ‘I think you’re being a bit presumptuous. You’re very young. You can have any job in this group that you want. Which one would you like?’ And I said, ‘Well chief, you can’t offer me what I really want… I want your job,’” he told Yale School o

He then used $50,000 in savings to start an investment firm, Cupola in Dubai, before purchasing another business-services company, Inchcape Middle East in 1999, selling it off for a total of $173m, and founding Abraaj in 2002.

From then on, the only way was up for Abraaj. Its limited partners were reporting an impressive 17 percent annual return. In the years of 2014 and 2015 alone, it saw as many as 13 full exits realise a whopping $450 million.

Naqvi had his 300-plus staff working in local offices in 25 countries from Kenya to Kazakhstan. Agriculture, electricity, aviation, technology, education and even ice cream – you name it, Naqvi had a hand in it.

Harvard Business School professor Josh Lerner called him “a decade-plus ahead” of others in understanding investment potential in developing markets, he told Forbes in 2015.

The magazine itself said Abraaj had a track record that developed-world money managers “would kill for”.

Aramex founder Fadi Ghandour, once a close friend of Naqvi’s, said Abraaj “not only improved the ecosystem, it created the private equity industry in the Middle East.”

But according to US charges, Naqvi was not the only star player in the rise – and fall – of Abraaj. Around 5,566km away in the Metropolitan Correctional Center in New York City, sits his long-time friend and Abraaj managing partner Mustafa Abdel-Wadood.

The financier and co-founder of the Young Arab Leaders non-profit organisation joined Abraaj in 2006, after hugely successful spells with the Orascom Construction, Sigma Capital and EFG Hermes. He quit Abraaj a year ago to start “a new life” with his own London-based private equity operation, his close friends tell Arabian Business.

Instead, Abdel-Wadood was arrested at a hotel in the city while on a trip to shop for elite schools for his son. Officers used mobile geotagging to secretly record phone calls, meetings and “millions” of documents and computer files before locating and detaining him, the Assistant US Attorney told Bloomberg.

Like Naqvi, Abdel-Wadood is now facing US charges for allegedly defrauding investors. He pleaded not guilty and was due back in court at the time this article went to press.

The Egyptian known for being “friendly and down-to-earth” has found his new incarcerated surroundings a world away from his previous lifestyle.

A source close to Abdel-Wadood, 49, says he often threw parties on a “massive, three-story, 90ft yacht called Caramel” which he “always parked in front of the Royal Mirage” swanky hotel in Dubai.

When he was not partying on board the vessel, he was hosting gatherings at his Emirates Hills villa.

“Abdel-Wadood once threw a party for his 40th birthday at his house and invited around 300 people, and everyone was just in awe of it. Chandeliers, top-of-the-range everything… It was just beautiful,” the source said.

The managing partner was also known for his love of cars, and owned a Lamborghini and BMW i8, according to the source.

He had “so many contacts”, the source said, that he “probably made an airline hold a plane for 20 minutes at Heathrow in London so that he can board.”

But last week, instead of catching flights, Abdel-Wadood was shacked up in the same prison that housed notorious Mexican drug lord Joaquin “El Chapo” Guzman, Gambino crime family boss John Gotti and Russian weapons trafficker Viktor Bout.

The 12-storey building, which is situated near New York’s City Hall, is connected to the nearby federal court by a tunnel located 12-metres below street level.

And while friends contacted by Arabian Business describe Naqvi and Abdel-Wadood as “completely different characters”, they now both have one thing in common: a federal indictment.

Assistant US Attorney Andrea Griswold said last week at a hearing in a federal court in Manhattan that from about 2014 until the collapse of Abraaj, Naqvi and Abdel-Wadood “together with others, devised and carried out a scheme to defraud investors by (a) depriving them of accurate information about material aspects of Abraaj’s financial health, including information critical to investment decisions, and (b) misappropriating investor funds for illicit purposes,” the Grand Jury charges state.

In total, Abraaj inflated the valuations of investments in private equity funds “by more than half a billion dollars,” the charges state, causing “at least hundreds of millions” of investor funds to be misappropriated, either to “disguise liquidity shortfalls or for their personal benefit or that of their associates”.

Abraaj had represented itself as a pioneer of impact investing that promoted social progress, for example, by investing in hospitals in developing countries.

Naqvi was personally known as the face of Middle East private equity, with his family having established the non-profit Aman Foundation trust to focus on health, nutrition and education in Pakistan.

He famously criticised “the West” for referring to Middle East and Asian markets as “emerging,” claiming that it is “patronising” and that the markets have “already emerged”. He called them “growth markets” instead.

Naqvi was also known for encouraging local investors to invest in their local communities. In an on-stage interview alongside Virgin Group founder Richard Branson at the Skoll World Forum 2014, he said “you can’t be driving a Range Rover through Soweto [in South Africa] without doing something about Soweto as well.”

The founder was even the recipient of numerous awards including the Oslo Business for Peace Award and Sitara-i-Imtiaz, a civilian honor awarded to him by the government of Pakistan.

But behind Naqvi’s seemingly inspiring world, “in truth, Abraaj was engaged in a massive fraud,” Griswold told the court (Reuters).

Abraaj began to unravel last February when four investors in its $1bn healthcare fund alleged mismanagement of funds and hired consultants to investigate the matter.

Things were about to get worse. Abraaj had planned to sell a stake in Pakistani utility K-Electric to Shanghai Electric in March 2017, which would have raised several hundred million dollars, but the transaction was delayed due to regulatory hurdles.

By this point, the firm’s foundation was shaky. Fees earned from managing investments between 2014 and 2017 at some points barely covered half of costs, according to figures from the liquidator’s report.

The company is currently in provisional liquidation, working to pay down an estimated $1bn of debt. Investigators are trying to locate investors’ money, with allegations of Abraaj swapping capital between funds to plug cash flow gaps.

The Dubai Financial Services Authority (DFSA) is also leading an investigation into Abraaj’s activities in the UAE and beyond.

Bryan Stirewalt, chief executive of DFSA, told The National he is hopeful it will conclude “within a reasonable time frame”, and that a report of the findings will be made public afterwards.

The DFSA also confirmed “it is communicating with the US Securities and Exchange Commission with whom it has a long-standing mutual assistance relationship,” the Dubai regulator said in a statement.

Both Naqvi and Abdel-Wadood deny any wrongdoing, with the latter having hired “star lawyer” Benjamin Brafman to defend him. The American criminal defense attorney and founder of Manhattan-based firm Brafman & Associates is known for representing high-profile defendants including celebrities, Mafia members, political figures and most recently, former film producer Harvey Weinstein.

Naqvi, a few days before his arrest, claimed those who knew him “don’t have a bad word to say about me,” he told The National.

With the case likely to take months – if not years – to come to court, both men will have plenty of time to reflect on their meteoric rise to the top, and sudden fall from grace.

As the world’s biggest private equity insolvency case continues to unravel, it remains to be seen whether the directors will be remembered as pioneers – or prisoners.


Marriott says to add 3,000 new hotel rooms in MidEast, Africa in 2019

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Marriott International has announced it expects to add 19 new properties and more than 3,000 rooms to its Middle East and Africa portfolio in 2019.

The new additions are in line with the company’s expansion plans to add more than 100 new properties and nearly 26,000 rooms across the region by the end of 2023.

Marriott estimates its development pipeline through 2023 represents up to $8 billion of investment from property owners and is expected to generate over 20,000 new jobs across the region.

“Our growth across the Middle East and Africa is fuelled by a strong demand for our diverse range of well-established brands, each offering different attributes that cater to this region’s ever changing and evolving marketplace,” said Jerome Briet, chief development officer, Middle East & Africa, Marriott International.

“This region continues to present us with opportunities to further grow and enhance our portfolio across new and established markets. While the majority of our growth will be through new-builds, we are seeing an increasing number of conversion opportunities, especially in the luxury space.”

Year-to-date, the company said it has opened five new properties in the region and is expected to add 14 more – bringing its portfolio across the Middle East and Africa to nearly 270 properties and over 60,000 rooms – by the end of the year.

The company said it is poised to expand its luxury footprint in the region by more than 70 percent by the end of 2023, with more than 25 luxury properties under development.

The growth of Marriott’s premium brands remains steady across the region with more than 30 hotels expected to be added to the portfolio by the end of 2023.

The company added that select-serve brands will continue their rapid growth trajectory across the Middle East and Africa with seven new properties opening by the end of this year.


Dubai offers investment opportunities in major public parks

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Dubai Municipality has announced several investment opportunities in the emirate’s public parks, such as the event spaces, and the allocation of different areas for restaurants and small shops.

Investors are being sought for Creek Park, Mamzar Smart Park, Mushrif Park, Zabeel Park and Safa Park in addition to the Quranic Park recently opened by Dubai Municipality in Al Khawaneej at a total cost of about AED130 million, a statement said.

Dawoud Al Hajri, director general of Dubai Municipality, said: “Dubai Municipality is making significant contributions by providing a conducive and encouraging environment for foreign and domestic investment.”

Najeeb Mohammed Saleh, director of planning department at Dubai Municipality added: “The aim of these opportunities is to invest approximately 10 percent of the area of ​​each park to implement investment projects to serve the community and raise the level of happiness of visitors to public parks.”

Creek Park, which includes the Dubai Dolphin Centre and the Children’s City, received nearly 3.8 million visitors over the last three years while Mamzar Smart Park offers beach facilities, children’s games, chalet rentals and beach sports courts, as well as swimming pools, a skating arena, and a variety of activities.

Mushrif Park has an international village that provides 13 models for Arab and foreign residences while Zabeel Park attracted nearly 3.1 million visitors over the past three years.

Safa Park features a mini-garden for women plus cafeterias, mosques, theatre, jogging track and sports ground service.


Saudi recruitment firm said to plan $200m share sale

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Sources say Saudi Arabia’s Maharah Human Resources is seeking to raise more than $200m in an initial public offering
Saudi Arabia’s Maharah Human Resources is seeking to raise more than $200 million in an initial public offering that’s likely to start next week, according to people familiar with the matter.

Maharah plans to offer 30 percent of its existing share capital to investors through a listing on the kingdom’s stock exchange, the people said, asking not to be identified because the matter is private. The offering will be open to both institutional and retail investors, the people said.

The company will be the first HR firm to list on the Saudi bourse, which predominantly trades banking and energy-related stocks. Maharah, which was formed in 2013, had more than 1 billion riyals ($266.7 million) in revenue last year, the people said.

Maharah’s IPO application has been approved by the Saudi regulator, CEO Yousef Al-Gafari said in an emailed statement. The company, which has a strong presence in Saudi Arabia, has set its future goals and developed its expansion plans to meet the kingdom’s 2030 diversification plan, he said.

Momentum is picking up in the $570 billion Saudi bourse as investors prepare for the inclusion in the emerging-markets group by MSCI and FTSE Russell.

Foreigners have been net buyers of stocks every week this year, helping the main equities gauge climb 18 percent – the fifth best performance among major gauges tracked by Bloomberg in 2019.

Fawaz Alhokair Group, the Saudi retailer that owns the franchise for brands like Banana Republic and Zara, said this week it plans to sell shares in its malls unit, seeking to raise as much as $1 billion.

Maharah started weighing IPO plans last year that would give the human-resources service provider a valuation of about 3 billion riyals ($800 million), people familiar with the matter said in October.

Samba Financial Group is underwriting and advising on the sale, while Himmah Capital is acting as the independent adviser, the people said at the time.

Maharah recruits foreign workers and helps secure work visas for employees in industries including medicine, retail and hospitality, according to its website.


Emirates says to make Riyadh its newest A380 route

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The Saudi capital city of Riyadh will be the 51st destination to join the Emirates A380 network when it launches on Sunday

Emirates said on Thursday it will make Riyadh its newest Airbus A380 service when it launches the superjumbo on the route from Sunday.

The Saudi capital city will be the 51st destination to join the Emirates A380 network.

Flight EK 817/818, currently operated by a Boeing 777-300ER, will will be operating on the route five times a week, the airline said.

Adil Al Ghaith, senior vice president Commercial Operations Gulf, Middle East & Iran said: “With the introduction of a regularly scheduled A380 service to Riyadh, Emirates is once again reaffirming its ongoing commitment to the kingdom of Saudi Arabia by catering to growing passenger demand.

“The introduction of the A380 to Riyadh also supports Saudi Vision 2030 by helping to grow the kingdom’s aviation sector through stimulating robust traffic growth, increasing connectivity and deepening its global footprint.”

The Emirates A380 aircraft that will serve the Dubai-Riyadh route will be set in a three-class configuration, with 429 spacious seats in Economy on the main deck, 76 fully flatbed seats in Business Class and 14 First Class private suites on the upper deck.

The airline previously deployed two one-off A380 missions to Riyadh in celebration of the kingdom’s National Days, and displayed its A380 aircraft at the recent Saudi International Airshow 2019.


Iran, Iraq Deal to Boost Cooperation in Electricity

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High-ranking officials from Iran and Iraq on Friday signed two memorandums of understanding (MoUs) and a contract to boost cooperation between the two countries in the electricity industry.

At the end of his three-day visit to Iran, Iraqi Minister of Electricity Luay al-Khatteeb signed two MoUs and a contract on the electric industry with Iranian Energy Minister Reza Ardakanian.

Speaking at the signing ceremony, Ardakanian said, “What is happening today as a result of the Iraqi minister of electricity’s visit to Iran and the negotiations that took place during this visit is the beginning of a new chapter in the comprehensive cooperation between the two countries in the field of electrical industry.”

“Within the framework of this cooperation, we intend to not only continue electricity exports as long as and as much as required by our Iraqi brothers and sisters, but also cooperate with them in technical terms… in the field of electricity,” he added.

The agreements came as governors of the central banks of Iran and Iraq signed an agreement to develop a payment mechanism aimed at facilitating banking ties between the two neighboring countries.

The deal on the payment mechanism was signed in a meeting between Iran’s Abdolnaser Hemmati and Iraq’s Ali Mohsen al-Allaq in Baghdad on Tuesday.

In addition to natural gas and electricity, Iraq imports a wide range of goods from Iran including food, agricultural products, home appliances, and air conditioners.

Speaking at a joint press conference with Iraqi President Barham Salih in Tehran in November, Iranian President Hassan Rouhani said the value of trade and economic interaction between Tehran and Baghdad stands at around $12 billion, adding that the two neighbors have the potential for a $20-billion trade target.

Rouhani hoped that cooperation between Tehran and Baghdad would contribute to regional security and stability.


Iran, Iraq agree on Development of Joint Oilfields

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Iran and Iraq have reached an understanding on the joint development of the Naft Shahr and Khorramshahr oilfields, Iranian Minister of Petroleum Bijan Zangeneh has announced.

Speaking on Sunday, during a visit to the Energy Industries Engineering and Design (EIED), an affiliate to the Oil Industries’ Engineering and Construction (OIEC), the official said:

“There are massive potentialities for expanding Iran-Iraq cooperation in oil, gas, refining and petrochemicals grounds, and Iran is ready to offer its capabilities to the Iraqi oil industry.”

He added that Thamer al-Ghadhban, Iraqi minister of oil, during a visit to EIED, learned about the capacities of the company, and it was decided that a joint partnership be established between OIEC and a similar company in Iraq in order to develop joint capacity utilization.”

The official further said that Iran had a lot of potentialities in the oil, gas, refining and petrochemicals sectors, adding: “Given the lack of development in the petrochemicals and gas industries in Iraq, there is a bright perspective for cooperation between the two countries.”

He also said that Iran’s gas dues from Iraq stood at a billion dollars already.

Iran the only exporter of natural gas to neighboring Iraq, both members of the Organization of the Petroleum Exporting Countries (OPEC).


Iraq, Jordan consider Joint Industrial Zone

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Jordanian Prime Minister, Omar Razzaz, on Monday met with Iraqi Defence Minister, Irfan Hayali, to discuss the Jordanian-Iraqi relations.

Razzaz underlined the depth of the historic Jordanian-Iraqi relations and the keenness to enhance joint cooperation to serve the interests of both countries and their peoples.

The premier also pointed to the directives of His Majesty King Abdullah II to increase cooperation and integration between the two countries.

Hayali conveyed the greetings of Iraqi Prime Minister, Haider al-Abadi, to the prime minister as well as his keenness to cooperate in all civil and military fields.

He pointed to the importance of the agreement signed yesterday between the two countries on military and security cooperation, exchange of expertise and information in the field of border protection, capacity development, and combating terrorism.

The meeting also dealt with the Turaibeel border crossing and the need to focus on promoting trade and investment exchange and establishing a joint industrial zone near the border between the two countries.


Iran, Iraq “to Meet $20bn Trade Target in 2 Yrs”

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Iran’s Minister of Industry, Mine and Trade Reza Rahmani said Tehran and Baghdad have agreed to reach the target of raising the value of annual trade exchange to $20 billion within the next two years.

Speaking at a TV program on Wednesday, Rahmani stressed the need to exploit the potential of Iran and Iraq for industrial and trade cooperation.

He added that the $20-billion annual trade target that the two neighbors have set is expected to be met in the not-so-distant future.

Rahmani, who was part of Iranian President Hassan Rouhani’s entourage during a landmark visit to Iraq earlier this week, said the two governments have agreed to get the most out of economic opportunities by 2021.

During the presidential visit to Iraq, the two countries’ official signed five deals to promote cooperation in various fields.

The documents entail cooperation between Iran and Iraq concerning the Basra-Shalamcheh railroad project, visa facilitation for investors, cooperation in the health sector, and agreements between the Ministry of Industry, Mines and Trade of Iran and Ministry of Trade of Iraq, and another one in the field of oil between the petroleum ministries of the two countries.

In February, governors of the central banks of Iran and Iraq signed an agreement to develop a payment mechanism aimed at facilitating banking ties between the two neighboring countries.

A few days ago, secretary of Iran-Iraq Chamber of Commerce said the obstacles to banking interaction between the two neighbors have been settled and the bilateral trade exchange is fairly normal.

He said a large number of technical and engineering projects worth 7 to 8 billion dollars which Iranian private sector companies were carrying out in Iraq have remained unfinished since the rise of the Daesh (ISIL) terrorist group in 2014.


Iran, Iraq to Set Up 5 Joint Industrial Parks

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The Iranian president’s chief of staff said Tehran and Baghdad have agreed to establish five joint industrial parks, including one in Iran’s border province of Kurdistan.

Speaking at a meeting on economic development of Kurdistan in the city of Sanandaj on Saturday, Mahmoud Vaezi said Iran and Iraq have devised plans to set up five joint industrial parks.

One of them is scheduled to be built in the province of Kurdistan, he added.

Iran is the top exporter of goods to Iraq, Vaezi said, noting that Iraq and its Kurdistan Region provide a perfect opportunity for Iran to boost exports and deal with the cruel US sanctions.

During Iranian President Hassan Rouhani’s visit to Iraq in March, the two countries signed five deals to promote cooperation in various fields.

The documents entail cooperation between Iran and Iraq concerning the Basra-Shalamcheh railroad project, visa facilitation for investors, cooperation in the health sector, and agreements between the Ministry of Industry, Mines and Trade of Iran and Ministry of Trade of Iraq, and another one in the field of oil between the petroleum ministries of the two countries.

Iran’s Minister of Industry, Mine and Trade Reza Rahmani has said that Tehran and Baghdad have agreed to reach the target of raising the value of annual trade exchange to $20 billion within two years.