Private Equity Firm Abraaj Group Files for Restructuring

U.S. investors have contributed to the Dubai-based private equity firm’s funds, including the Bill and Melinda Gates Foundation.

Arif Naqvi, CEO of Abraaj Capital (Luke MacGregor/Bloomberg)

Arif Naqvi, CEO of Abraaj Capital

(Luke MacGregor/Bloomberg)

The Abraaj Group, a private equity firm based in Dubai, is restructuring its business with the aim of being acquired.

The firm, which manages $13.6 billion in assets, said Thursday that it has filed for a court-supervised restructuring program in the Cayman Islands. “This process marks the culmination of an extremely complex and challenging phase of negotiations and detailed planning,” said Arif Naqvi, the founder and chief executive officer of Abraaj, in the statement.

The filing with the Grand Court of the Cayman Islands follows a Wall Street Journal report in February that Abraaj Group’s investors, including Bill and Melinda Gates Foundation, had hired an auditor to investigate why some of their money had not yet been used to build hospitals.

“Since our differences with certain investors first came to light, we have worked exhaustively and transparently to investigate the matter and address their concerns,” Naqvi said in the firm’s statement. He added that the private equity firm has all the while ensured that its global investment teams continued to support the growth of its partner companies.

Abraaj, which focuses on investing in emerging markets, says on its website that it has deployed $8.1 billion since the firm was founded in 2002, producing $6.1 billion in returns.

Investors in the firm’s funds include the Gates Foundation and the World Bank’s International Finance Corp., both of which contributed $100 million in the firm’s Growth Market Health Fund, people familiar with the matter confirmed Thursday. The Gates Foundation was instrumental in the creation of the health fund, helping to attract $900 million from other investors, one of the people said. Spokespeople for the World Bank’s International Financial Corp. and the Gates Foundation declined to comment on the restructuring of Abraaj.

U.S. pension funds have invested in other funds managed by Abraaj or considered doing so.

For example, the Washington State Investment Board invested as much as $250 million in the firm’s Private Equity Fund VI, according to its meeting minutes in June 2017. The investment board did not return a phone call seeking comment on Abraaj’s restructuring.

St. Mary’s County Sheriff’s Office Retirement Plan had planned to commit $1 million to Abraaj’s Private Equity Fund IV, according to its January meeting minutes. In April, after “new information came to light,” the office rescinded the commitment. The retirement plan did not immediately return a phone call seeking comment.

Last year, the Alaska Permanent Fund Corp. also looked at investing in Abraaj, the fund’s meeting minutes show. It’s unclear whether the fund invested with the private equity firm. A spokesperson for the state fund did not return a phone call seeking comment.

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As part of its filing with the Grand Court of the Cayman Islands, Abraaj said it was seeking to appoint Simon Conway of PwC Corporate Finance and Recovery, and Michael Jervis and Mo Farzadi of PricewaterhouseCoopers, as joint liquidators. Naqvi said he expects the restructuring to take a few months.

Abraaj has hired Allen & Overy, Carey Olsen, and Millbank, Tweed, Hadley & McCloy to provide legal advice, and Houlihan Lokey for financial advice during the process, according to the firm’s statement.

Meanwhile, Naqvi has sought to assure investors that Abraaj would continue to produce gains.

“Regardless of their future ownership, we are confident that the funds will achieve above-market returns in the years to come,” he said in the statement.