Deloitte 'seeks legal protection and money' as Abraaj sale drags on

Accounting firm is concerned it could face trouble over its role in a protracted sale

Deloitte scored the best of the big four companies in the regulator's inspection report. 
Deloitte scored the best of the big four companies in the regulator's inspection report. 

Global corporate services provider Deloitte, which is overseeing the break-up of embattled Abraaj Group’s private-equity unit, is asking the investors in the Dubai company for additional legal protection and money, according to The Wall Street Journal.

Deloitte has asked Abraaj backers for assurances that it will not be sued over its role in the sale of some of the private-equity company’s Africa and Middle East funds, the newspaper reported on Friday. It also asked investors for up to $10 million (Dh36.7m) to cover costs linked to the protracted liquidation process.

The liquidator has said that if the added legal protection is not endorsed, the sale to emerging-market company Actis could face delays and may not materialise, the newspaper reported.

Deloitte declined to comment when contacted by The National.

Abraaj, founded by Arif Naqvi in 2002, was the largest buyout fund in the Middle East and North Africa until it collapsed last year after the fallout with investors, including the Gates Foundation, who questioned the use of their money in a $1 billion healthcare fund.

Deloitte was appointed by a Cayman Islands court in June 2018 to oversee the liquidation of Abraaj’s business after the company collapsed over the mismanagement.

Some Abraaj investors are reluctant to pay the additional costs requested by Deloitte and have sought legal advice on whether they are required to do so, WSJ reported.

There is a clause in few of Abraaj’s investment deals that, under certain conditions, allows other shareholders – such as people who retain a stake in a business they sold to Abraaj – to buy-back stakes the company owns at a sizable discount to market value, WSJ said. The proposed takeover of five Abraaj funds by Actis could allow some shareholders to exercise the clause.

Liquidators are concerned that investors may hold the accounting company liable for any losses they incur if the clause is exercised, WSJ reported.

Updated: March 26, 2019 04:08 AM


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