The future of MerchantBridge, one of the largest private equity investors in Iraq, is in question a year after the death of two of its founders and a messy legal dispute over one of its holdings.
Founded by Basil Al Rahim and other wealthy Arabs in 2001, MerchantBridge has served as a conduit for investments by big names such as Qatar National Bank, Qatar Telecom and Lafarge Cement in Iraq as the country emerges from decades of war and sanctions.
But Al Rahim and partner Abdullah Lahoud died when the company's private jet crashed en route from Sulaimaniyah, in the Kurdistan region of Iraq, to Beirut in February last year, triggering a legal dispute over a 19 per cent stake in Asiacell, an Iraqi mobile telecommunications company.
The case was finally settled out of court this year.
The lack of leadership at MerchantBridge, however, has left the company in disarray.
Its offices in Dubai and Saudi Arabia have closed.
Two senior executives, Samir Arab, a partner, and Abdullah Ajaji, an executive director, left the firm this year. Eric le Blan, a former chief operating officer and now the acting chief executive, is the only senior officer still at the company since the plane crash. He declined to comment when contacted by The National.
After Al Rahim's death, court documents filed in the Cayman Islands show, the Asiacell investment that was supposed to be in the company's name had been transferred to a special purpose vehicle (SPV) in Al Rahim's own name.
Shareholders, consisting of several wealthy Arabian Gulf families, responded to this revelation by filing a writ of summons in the Cayman Islands, where the SPV was registered.
They demanded that the assets and profits from the investment be reassigned to MerchantBridge itself. The plaintiffs alleged that the assets and revenue of the SPV, called Bluewood, established by Al Rahim, were actually held in trust for the investors, legal filings show.
MerchantBridge initially had a 49 per cent stake in Asiacell. It sold 30 per cent to Qatar Telecom in 2007. The remaining 19 per cent stake in the mobile company was at the heart of the dispute.
"It was resolved amicably among the shareholders," said Fadi Ghandour, who is representing Al Rahim's estate. Mr Ghandour is the founder and former chief executive of Aramex, the region's biggest courier company, and is the brother of Al Rahim's widow, but there is no connection between Aramex and MerchantBridge.
"Not a single shareholder got burnt. That was part of the exit."
Qatar Telecom said on June 5 that it was buying the remaining 19 per cent in Asiacell from MerchantBridge for US$1.47 billion (Dh5.4bn), bringing its total ownership in the Iraqi company to 60 per cent.
MerchantBridge's remaining investments in Iraq include a joint venture with Qatar National Bank in Baghdad-based Mansour Bank, and a cement factory in Karbala with Lafarge Cement.
Plans for those holdings had not been decided, Mr Ghandour said.
halsayegh@thenational.ae
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The Land between Two Rivers: Writing in an Age of Refugees
Tom Sleigh, Graywolf Press
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Dubai World Cup factbox
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The specs
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MATCH INFO
Rajasthan Royals 158-8 (20 ovs)
Kings XI Punjab 143/7 (20 ovs)
Rajasthan Royals won by 15 runs
