UAE’s Abu Dhabi Commercial Bank PJSC (ADCB) has sold a portfolio of non-performing loans (NPL) worth 4.2 billion dirhams ($1.1 billion) to investment funds advised by Davidson Kempner Capital Management LP.
The transaction represents the first sale of a significant portfolio of NPLs by ADCB and is thought to be the largest such transaction effected to date in the UAE, a statement from Davidson Kempner said on Tuesday.
Davidson Kempner is a US- based investment firm with approximately $36 billion in assets under management.
The portfolio acquired by Davidson Kempner consists of 44 corporate loans to UAE-based small and medium-size enterprises, with an aggregate face value of AED 4.2 billion.
Bloomberg reported in October 2022 that ADCB is selling $1.1 billion of bad debt, including personal and corporate loans and real estate assets in a move to “declutter its balance sheet”. In 2020, the lender was hit by $292 million in impairments on debt exposure to NMC Health and payments group Finablr, which ran into financial difficulties.
ADCB is yet to report full-year 2022 financial earnings. For Q3 2022, it reported NPL ratio of 5.46% compared with 5.59% as of end-June.
Seapoint Capital Limited will act as the Special Servicer for Davidson Kempner, and Reviva Capital S.A. will act as Loan Servicer, the statement said.