Abraaj Group investors appoint US firm to oversee separation of health fund

Investors including the Bill & Melinda Gates Foundation have alleged the Dubai-based equity firm misused money allocated to the healthcare fund

Abraaj founder Arif Naqvi. The collapse of the firm makes fund raising more challenging. World Economic Forum

Investors in Abraaj Group have appointed AlixPartners to oversee the separation of the health fund at the heart of mismanagement allegations.

AlixPartners is an American consulting firm that specialises in business turnaround work.

“We are delighted that investors continue to support and finance the fund as it goes through this transition and thank management, portfolio company founders, and advisers for their assistance and support of the fund’s mission," it said in a statement.

The Dubai-based private equity firm, which has around $13.6 billion assets under management, earlier this year was said to have misused funds earmarked for the Abraaj Growth Markets Health Fund. Investors of the healthcare fund include Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation (IFC), Britain’s CDC Group and Proparco Group of France.

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Twenty-four concerned investors in the fund hired forensic accountants to investigate what had happened to some of the invested money.

"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 investor statement added.

The Abraaj fund is involved in efforts to deliver affordable healthcare to low and middle-income groups in ten of the largest cities in sub-Saharan Africa as well as South Asia.

On Thursday, Dubai International Financial Centre Courts appointed joint provisional liquidators to oversee the winding up Abraaj's Dubai-based entity.

The emirate's financial services regulator the Dubai Financial Services Authority also said it had stopped the group from initiating new work or moving money to other entities.

Abraaj has denied any wrongdoing, but the allegations have caused a liquidity crisis at what was once the Middle East's biggest private equity firm.

Meanwhile, Abraaj Group founder Arif Naqvi faces allegations of bouncing cheques to a creditor, and may be subject to an international arrest order when a Sharjah court issues a sentence on August 26 in a case against him.