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Arif Naqvi

Six firms in race to run Abraaj's health fund: report

DUBAI, July 4, 2018

At least six firms including Colony Capital, TPG and Cerberus Capital Management are vying to run troubled Abraaj Group’s $1 billion healthcare fund, a Reuters report said.
 
Deloitte, the provisional liquidators of Abraaj, and investors in its healthcare funds are weighing these inquiries, which could pave the way for the healthcare fund to separate from the rest of Abraaj, Reuters quoted three sources familiar with the matter as saying.
 
How Abraaj used some of the money in the healthcare fund led to a dispute with four investors including the Bill & Melinda Gates Foundation and the International Finance Corp, it said. This triggered months of turmoil at the Middle East and North Africa’s biggest buyout fund, which halted its fundraising activities and shook up its management as it tackled ensuing debt repayment problems.
 
Abraaj, which has denied misusing the funds, reiterated in a statement on Monday that it is working closely and collaboratively with its investors to ensure that the work of the healthcare fund can continue uninterrupted.
 
Despite the row, investors want to remain invested in the fund, these sources said. The fund had used 44 percent of its capital for investments with a focus on developing healthcare systems across Africa and South Asia. It had made a total of nine investments that included 25 operating hospitals, 17 clinics and 32 diagnostic centres covering 1.9 million patients, Abraaj said.
 
The row, which began as early as October last year but only became public months later, revolved around why Abraaj did not invest part of the $1 billion healthcare fund in hospitals and clinics, despite drawing on it, the sources said.
 
Abraaj said this was due to regulatory delays in projects in Africa and Pakistan and that the fund’s terms allowed money to be retained even if an investment was delayed.
 
Following talks with investors, Abraaj returned the unused capital to them at the end of December, it said.
 
A summary report for creditors prepared by Deloitte said on June 4 there was no evidence of embezzlement or misappropriation, but highlighted a lack of “adequate governance” and “overall weakness at Abraaj.
 
In another development, Dubai's financial regulator is investigating allegations of mismanagement at Abraaj, Reuters said quoting two sources familiar with the matter.
 
The Dubai Financial Services Authority (DFSA) has interviewed the firm's founder, Arif Naqvi, and other senior executives in the past few months as part of the probe, the sources said.
 
The DFSA declined to comment. Abraaj said in a statement discussions between it and the regulator were "ongoing."
 
"While we do not comment on confidential discussions with our regulators, we are highly focused on strengthening our corporate governance and internal controls," the company said, according to Reuters.
 
In June, Abraaj announced that the group and Colony Capital, through the group’s joint provisional liquidators, PricewaterhouseCoopers and Deloitte, had reached agreement on the principal terms for the sale and purchase of the group’s Latin America, Sub-Saharan Africa, North Africa and Turkey Funds management business and the group’s limited
partnership interests in the underlying funds, along with staff in the eight offices being transferred under the terms of the deal.
 
Colony has also agreed to oversee, on an interim basis, other group funds that are not being acquired so that the group and all its stakeholders have a comprehensive global solution in place. 
The agreement has received in principle regulatory approval and is expected to close upon approval from the Grand Court of the Cayman Islands as well as other customary consents. 
 
Abraaj was founded in 2002 by Arif Naqvi and emerged to become a leading private equity investor in growth markets with a regional footprint spanning Latin America to South East Asia. The group has investments which include a portfolio of mature businesses covering diverse sectors including financial services, FMCG, industrials, healthcare, education, manufacturing and logistics.



Tags: Abraaj | Colony |

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