DUBAI: Private equity firm Abraaj Group is considering selling part of its investment management business as it seeks to stem the fallout from a dispute with investors in one of its funds, three sources familiar with the matter said.

Dubai-based Abraaj is in early stage talks with several possible buyers, the sources said, with one source saying Abu Dhabi Financial Group was among them and another source saying Abraaj had received interest from international financial firms.

The talks are focused on Abraaj’s investment management business, a core part of its operations, two of the sources said.

The Wall Street Journal earlier reported that Abu Dhabi-state-owned investment vehicle Mubadala Development and Abu Dhabi Financial Group had held talks with Abraaj about a possible sale of the firm’s private equity business.

Abraaj, Abu Dhabi Financial Group and Mubadala declined to comment when contacted by Reuters.

Abraaj, founded in 2002 by Arif Naqvi, has shaken up its management, suspended new investments and undertaken a review of its corporate structure following a dispute with four of its investors – including the Bill & Melinda Gates Foundation and International Finance Corporation, a member of the World Bank Group – over the use of their money in a $1 billion healthcare fund.

A sale of part of the business could be helpful in diversifying the company’s shareholder base and improving governance standards, one of the sources said.

The four investors had separately hired forensic accountants Ankura Consulting to investigate how money was used in the Abraaj Healthcare Fund, a source close to one of the firms told Reuters last month.

Abraaj has strongly denied reports that it misused the money. Still, the dispute involving one of the largest emerging markets-focused investors has rocked the Middle East’s burgeoning private equity scene.

Seperately, Bloomberg reported, citing “people with knowledge of the matter” that the delay in sale of KEL shares was hurting Abraaj’s cash position. The private equity investor has been hit by a string of high profile departures of key personnel, including its Chief Financial Officer and a Managing Partner since the dispute hit the headlines. Its founder, Arif Naqvi, ceded control of the company’s fund management business shortly after the troubles began, and the company has halted many of its investments, while returning investor’s funds in some cases, while an internal review of its corporate structure and governance is underway.

Published in Dawn, March 27th, 2018

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Judiciary’s SOS
Updated 28 Mar, 2024

Judiciary’s SOS

The ball is now in CJP Isa’s court, and he will feel pressure to take action.
Data protection
28 Mar, 2024

Data protection

WHAT do we want? Data protection laws. When do we want them? Immediately. Without delay, if we are to prevent ...
Selling humans
28 Mar, 2024

Selling humans

HUMAN traders feed off economic distress; they peddle promises of a better life to the impoverished who, mired in...
New terror wave
Updated 27 Mar, 2024

New terror wave

The time has come for decisive government action against militancy.
Development costs
27 Mar, 2024

Development costs

A HEFTY escalation of 30pc in the cost of ongoing federal development schemes is one of the many decisions where the...
Aitchison controversy
Updated 27 Mar, 2024

Aitchison controversy

It is hoped that higher authorities realise that politics and nepotism have no place in schools.