Al Numa Capital to sue Catalan Government

01 January 2008

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After having the mandate for the management of Mediterrania - a EUR100m fund focused on investments in Spain and Maghreb - taken away, Al Numa Capital is to commence legal proceedings against the Catalan Government.

Following months of wrangling with state-owned finance institution Institut Catala de Finances (ICF), managers at Al Numa were told the mandate was to be transferred to investment bank Riva y Garcia. According to the managers at Al Numa, ICF also attempted to persuade the team to voluntarily renounce the mandate. It is understood that Al Numa's EUR200,000 bid bond has been retained by the institution, which is now refusing to pay it back.

Last year, ICF, following the advice of an independent panel set up by financial agency Instituto de Credito Oficial (ICO) and the European Investment Bank (EIB), had appointed Al Numa Capital, then a newly-established firm, to manage the fund. Riva y Garcia was a runner-up in the tender for the management of the fund. Al Numa achieved a score which was 32% higher than its closest competitor during the evaluation process, which used criteria such as deal track record, quality of the team, knowledge of the Maghrebi region and proven ability to fund raise.

ICF mentions loss of trust and changes in Al Numa's shareholding base as the main reasons for the contract termination. In the GPs' opinion, the institution allegedly misused its power by ending the relationship for no objective reason, since the ability to manage the fund was never questioned. Additionally, the managers see the decision as a political manoeuvre to favour purely local players. Although Al Numa is based in Barcelona, its shareholding structure includes Capital Morocco, an affiliate of Morocco's BMCE Bank and UK-based European Co-investment Partners LLP (formerly known as Glenalta Capital LLP).

Globalpraxis, a Barcelona-based management consultancy and initially also a shareholder of Al Numa, lost interest in the mandate due to structural changes suggested by Spanish regulator CNMV. It is understood that the changes prevented Globalpraxis to provide consulting services such as IT and accounting to the private equity firm. However, the managers pointed out that a clause in the tender submission allowed changes in the shareholding constitution. It was also mentioned that no capability was lost in the process, since Globalpraxis' main Maghreb and M&A expert remained on Al Numa Capital's investment committee.

"The only argument of ICF is that we did not honour the contract. This is simply wrong, because Al Numa Capital just enforced a clause in our tender submission that had been previously accepted," says Alex Sanchez-Mollinger, managing director of the Spanish firm. "It is fair to say that we were strictly compliant to the conditions set in paper and the same goes for the work we have done. Unfortunately, the same cannot be said of ICF, which has unlawfully broken a valid contract and is not acting in the public's best interest by barring the best team from managing the Maghrebi fund," Sanchez-Mollinger alleged.

It is understood that the GPs were already in advanced stages of due diligence with a Spanish and a Moroccan business. Although the future of Al Numa Capital is uncertain, the firm still has to decide what to do with the work that has already been done. The regulation process of the management company with CNMV has been temporarily discontinued.

ICF did not return calls when approached for comment.