$1bn healthcare fund separated: The source of Abraaj’s problems resolved?
Given all the controversy surrounding the Abraaj Group, and the ongoing legal troubles of its founder Arif Naqvi, it could be easy to forget where all these problems started.
Abraaj’s string of misfortune all started when in February, the private equity firm was accused of mishandling a $1 billion healthcare fund.
Now, investors have appointed US global consulting firm AlixPartners to oversee the separation of AGHF from the Abraaj Group to ensure the long-term success of the Fund in delivering accessible, affordable and quality healthcare in developing countries, a statement by the American firm announced.
AlixPartners to the rescue
AlixPartners is currently working alongside the Fund’s senior operational team and the provisional liquidators of Abraaj Investment Management Limited (AIML) while also supporting the search for a permanent replacement investment manager to manage the Fund and continue its vital work, their statement explained.
Simon Appell from AlixPartners commented: “The Abraaj Growth Markets Health Fund is helping to deliver accessible, affordable and quality care for low and middle-income people in 10 of the largest cities in Sub Saharan Africa and South Asia, and we want to see that continue. We’re working with the Fund’s investors, its senior operational team and the provisional liquidators as part of ongoing discussions with several potential replacement managers for the Fund who will continue to support its investee businesses.”
The day Abraaj came crashing down
Back in February, four stakeholders with capital invested in the Abraaj Growth Markets Health Fund (AGHF) hired investigators to look into the finances of the $1 billion fund. The first investigation by KPMG turned up empty, but a second one by Deloitte proved investor concerns.
Bloomberg reports that the inquiry by Deloitte found that the company had commingled money in the health-care fund and a private equity fund with its holding company, a move likely made after encountering “liquidity problems” caused by delays in the completion of certain deals, including the sale of Pakistani utility K Electric.
Findings showed a “lack of adequate governance, including segregation of duties, and the overall weakness in the control framework.”
The four investors who backed the Abraaj Growth Markets Health Fund include the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation, Proparco Group of France and the UK’s CDC Group.
Abraaj’s founder faces criminal charges
To top things off for the firm, its founder Arif Naqvi has come under fire after he was involved in a bounced cheque case last month.
Despite Naqvi and his creditor Hamid Jafar of Crescent Group supposedly coming to an out-of-court agreement, Jafar followed his first legal claim with another regarding a second bounced cheque – this was one worth $217 million. The first cheque was worth $48 million, and the total sum owed is $300 million.
A UAE court will issue judgment on the case on August 26.