Market News

Brookside, Java PE in self-liquidation bid

Java House
A Java House outlet. The coffee chain is 100 per cent owned by Abraaj. FILE PHOTO | NMG 

Private Equity (PE) firm Abraaj Holdings, an investor in Brookside Dairies, Avenue Group and Java chain of restaurants, is reportedly planning provisional liquidation in the Cayman Islands to fend off winding-up petitions.

The firm is said to be forestalling two petitions lodged by Kuwaiti Public Institution for Social Security and Delaware-based private debt specialist Auctus Fund Ltd.

If granted Abraaj Holdings will have more time to negotiate with its creditors to restructure debt as well as dispose of some of its stakes in companies around the world to raise funds and meet financial obligations.

In an emailed response to news agencies, Abraaj remained mute on its indebtedness saying “investors, creditors and broader stakeholders' interest were of utmost interest in seeking substantive measures to keep the company afloat.”

In Kenya Abraaj has a 10 per cent stake in leading dairy processor Brookside Dairies, a 100per cent stake in coffee chain operator Java, a 56.2 per cent stake in private healthcare provider Avenue Healthcare and an undisclosed stake in tech firm Seven Seas Technologies.

Trouble at the fund arose early this year after some investors in its Sh103 billion healthcare fund accused Abraaj of mishandling their cash especially in its latest investments in Kenya, Nigeria and Pakistan.

This prompted the Dubai-based firm to invite audit firm KPMG to look at its finances. The auditors returned a clean bill of health.

But the top four investors, including Bill and Melinda Gates Foundation, were not satisfied leading to hiring of a second audit firm, Deloitte.

According to Reuters news agency, Deloitte confirmed Sh9.5 billion in Abraaj’s third and fourth fund were mixed without the investors’ knowledge.Another agency, Bloomberg, said Abraaj faced cash shortage when the sale of Pakistani utility K-Electric was delayed.

The local office declined to comment saying its health director Fredd Kambo was on leave.

He had earlier informed this paper that the fund was still committed to investing in Kenya.