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Arab investment firm MerchantBridge left in limbo

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.

MerchantBridge has served as a conduit for investments by big names such as Qatar National Bank, Qatar Telecom and Lafarge Cement, above. Mushtaq Muhammed / Reuters
MerchantBridge has served as a conduit for investments by big names such as Qatar National Bank, Qatar Telecom and Lafarge Cement, above. Mushtaq Muhammed / Reuters

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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