Air Arabia PJSC fell in Dubai after the airline disclosed exposure of $336 million to funds managed by Abraaj Group, the private equity firm that’s being restructured.

The shares declined 3.9 percent, taking its loss this week to 12 percent. Dubai’s benchmark stock index rose 0.2 percent.

“This is way bigger an exposure than anyone expected,” said Tariq Qaqish, managing director of the asset-management division at Mena Corp. Financial Services LLC in Dubai. “What is shocking is that the company invested almost 10 percent of its total assets and all their investment book with one company.”

Abraaj, once one of the developing world’s most influential investors, last week filed for a court-supervised restructuring as it fights allegations of misused funds. The firm said Thursday that U.S. asset manager Colony Capital Inc. agreed to acquire its Latin America, sub-Saharan Africa, North Africa and Turkey funds management business, as well as Abraaj’s limited partnership interests in the underlying funds.

Air Arabia’s exposure won’t have a “significant impact” on daily operations or its liquidity status, the Sharjah, United Arab Emirates-based company said Wednesday. The carrier said it has a team of experts working with stakeholders and creditors to protect its investment and business interests.

Corporate Governance

“This poses a serious corporate governance and strategic risk for the company,” said Joice Mathew, the head of equity research at United Securities in Muscat. “I am surprised that the company had more than 70 percent of its 1.5 billion-dirham investment portfolio exposed to a single fund and this was never flagged by the auditors or questioned by the shareholders.”

The airline, which has a market value of about $1.3 billion, tried to reassure investors on Wednesday without disclosing the extent of its investments. Abraaj at one point owned 17 percent of the carrier and the private equity firm’s founder Arif Naqvi is still one of its board members.