DUBAI: Abraaj Group agreed to sell its Latin America, Sub Saharan Africa, North Africa and Turkey Funds management business to US investment management firm Colony Capital Inc, both companies announced on Thursday.
The agreement comes after months of turmoil at Abraaj in the wake of its dispute with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp (IFC), over the use of their money in a $1 billion healthcare fund. The group has denied it misused the funds.
The sale is part of a provisional liquidation and restructuring as set out in a court order. Financial terms of the deal were not disclosed.
Price not disclosed; UAE regulator tells all listed cos to declare any exposure to Abraaj
Colony Capital has also agreed to oversee, on an interim basis, other Abraaj group funds that are not being acquired so that the group and all its stakeholders have a “comprehensive global solution in place”, the companies said.
The other group funds include the $1bn healthcare fund, and some legacy funds of the private equity group.
Sources told Reuters earlier US buyout firm TPG was in talks with investors in Abraaj’s healthcare fund to take over management of the assets of the $1bn fund.
The K-Electric asset, which is being sold in Pakistan and is owned by Abraaj Holdings, is also not part of the transaction.
Colony’s deal comes after other investors such as Cerberus Capital Management had also made offers for the Abraaj business before it filed for provisional liquidation in the Cayman Islands.
A unit of Abu Dhabi Financial Group earlier this week made a conditional offer to buy Abraaj’s management interest in all of its limited partnerships for $50m, according to a document seen by Reuters.
Since Dubai-based Abraaj’s row with some investors became public early this year, it split its investment management business and holding company, while its founder Arif Naqvi stepped aside from the day-to-day running of its private equity fund unit and the firm halted its investment activities.
Abraaj said the latest agreement has received in-principle regulatory approval and is expected to close upon approval from the Grand Court of the Cayman Islands as well as other customary consents.
Tom Barrack, executive chairman, Colony Capital, said he hoped the transaction would enable the process of rebuilding on all sides and also bring an end to the speculation that has swirled around Abraaj over the last months.
Meanwhile, the UAE’s top securities regulator has asked all listed companies to declare their exposure to Dubai-based private equity firm Abraaj, which filed for provisional liquidation last week.
The Securities & Commodities Authority sent a letter earlier this week and companies had until Thursday to submit their responses, Obaid al Zaabi, chief executive of the regulator told Reuters.
Air Arabia, a Dubai-listed low cost carrier, said this week it had a $336m exposure to Abraaj, which is the Middle East’s biggest private equity firm. Shares in the airline plunged after the announcement.
Al Zaabi said some companies in the UAE had exposure to Abraaj, without naming them.
A court in the Cayman Islands, where Abraaj Holdings is registered, ordered this week that PwC be appointed as provisional liquidators of the company and Deloitte as liquidators of Abraaj Investment Management Ltd.
On Thursday, the Dubai Financial Services Authority (DFSA), which is the regulator of the Dubai International Financial Centre (DIFC), said it would discuss “various matters” with the liquidators and “will continue to work toward safeguarding the interests of investors.”
The DFSA is involved because Abraaj has an entity regulated in DIFC.
Regarding the sale of some Abraaj operations to Colony Capital, the DFSA said in a statement that it was aware of the proposed deal.
Published in Dawn, June 22nd, 2018