Dubai’s Abraaj said to owe fund investors at least $300m

Troubled Dubai-based private equity firm Abraaj is said to owe investors in one of its funds at least $300m, according to reports.

Bloomberg cited a letter from investors as stating the amount owed to investors in the $1.6bn Private Equity Fund IV was nearly triple the$94.6m found under a review by accounting firm Deloitte in June.

The investors said in the August 13 letter that they wanted to stop paying management fees to Abraaj citing breach of duties.

The investors’ council has also said it will take legal action if it cannot reach a deal with appointed liquidators Deloitte and PwC, saying they had made “insufficient progress” to prevent losses linked to mismanagement at the firm since being appointed on June 18.

“The council has frankly run out of patience,” the letter reads, according to Bloomberg.

The liquidators are trying to settle more than $1bn of debt owed by Abraaj, which filed for liquidation in the Cayman Islands after a row with investors related to alleged misuse of their money relating to a $1bn healthcare fund.

Abraaj Capital has been barred from taking on new business or moving money by Dubai’s financial services regulator.

Read: Dubai regulator probes Abraaj Capital, stops it from taking on new work

Meanwhile, companies including Cerberus Capital Management, Colony Capital, Crescent Capital and Agility Capital are in the bidding for Abraaj’s investment management business.

Read: Bidders emerge for Abraaj’s investment unit after Colony Capital offer rejected

But investors say the sale process is taking too long.

Separately, Abraaj founder Arif Naqvi is facing a judgement in the UAE for issuing a cheque without sufficient funds.

Naqvi and fellow executive Rafique Lakhani are accused of writing a cheque for Dhs798.9m ($218m) to Abraaj founding shareholder Hamid Jafar.

The two sides are still discussing an out of court settlement.

Read: Judgment in ‘bounced cheque’ case against Abraaj founder postponed