A Kuwaiti investment firm is alleging that private equity giant Carlyle Group LP sold it a fixed income fund in 2006 without the necessary licence, and is seeking approval for its lawsuit against the U.S. firm to be heard in Kuwait rather than the United States.
The case illustrates some of the potential legal pitfalls which U.S. and European private equity firms operating in the Gulf face. Over the last several years they have flocked to the region, attracting hundreds of millions of dollars of investment from the Gulf's wealthy sovereign funds and family-owned firms.
National Industries Group (NIG), a company controlled by one of Kuwait's biggest merchant families, invested $25 million in Carlyle Capital Corp (CCC), a fixed income fund launched by Carlyle in 2006. The fund, which raised over $1 billion, collapsed during the credit crisis in 2008 after defaulting on about $16.6 billion in debt.
Investors in the fund, an early victim of the credit crisis and an example
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