Kuwaiti firm sues Carlyle for license

KUWAIT CITY - The Associated Press

A Kuwaiti company suing the Carlyle Group over a $25 million investment that went bad is now accusing the private equity firm of marketing the deal without a license as it seeks to have its case heard in Kuwaiti courts. The latest claim by Kuwait’s National Industries Group adds a new twist to its more than two-and-a-half year legal challenge to Carlyle, and could complicate the American company’s relationships with other wealthy Mideast investors.

NIG’s lawsuit focuses on a Carlyle investment fund that was one of the earliest casualties of the financial crisis when it collapsed in 2008. The fund has been the subject of multiple lawsuits against Carlyle.

In a motion filed this month with a Delaware court hearing the case, NIG argues that the dispute should be heard in Kuwait because Carlyle lacked the legal basis to pitch the deal there in the first place.

Selling foreign securities or shares in funds in Kuwait requires a license from local authorities, said lawyer Ahmed Zakaria Abdel-Magied. He added that marketing such investments without a license makes deals invalid. NIG said yesterday that it believes it is entitled to the return of its $25-million investment under Kuwaiti law. The Carlyle fund involved in the case, known as Carlyle Capital, went bust in March 2008. It used high levels of debt to invest in securities backed by bundles of home mortgages that had been given an AAA rating by credit agencies.