US hedge fund Davidson Kempner Capital Management has bought $1.1 billion (AED 4.2 billion) of non-performing loans from Abu Dhabi Commercial Bank (ADCB) as the second-largest UAE lender aims to declutter its balance sheet heaped with high-profile corporate defaults.
The transaction marks the first sale of a significant portfolio of bad debts by ADCB, Davidson Kempner said in a statement Wednesday, adding that this was also the largest transaction of its kind in the UAE to date.
Restructuring expert Seapoint Capital Ltd will act as Davidson Kempner’s special services, and Reviva Capital will act as loan servicer for the company.
The sale of the portfolio, which consists of 44 corporate loans to UAE-based small- and medium-sized enterprises, will help the bank to move on from several corporate collapses in recent years, including the hospital group NMC Health Plc.
ADCB recovered in 2021 from its lending to the UAE hospital operator, NMC, which ran into financial difficulties and was placed under guardianship in 2020.
The lender obtained a decision to restructure the company’s debt and issue “exit instruments” to creditors in a debt claim of $2.25 billion, equal to the expected future value of the NMC Group.
In March 2022, the bank said it “received 37.5% of transferable exit instruments in a $2.3 billion facility issued by a new NMC holding company following the completion of a debt restructuring process and a successful exit from administration.”
