UAE’s Abraaj suspends fundraising for $6bn new fund

Dubai-based private equity firm Abraaj has suspended fundraising for a new $6bn fund, sources familiar with the matter said, as the firm began a review of its business following a dispute with some of its investors in a healthcare fund.

The fund had its first close of about $3bn last year, but has paused fresh fundraising during a recent review of the structure of the business, they said.

The shakeup also saw the firm’s founder, Arif Naqvi, step down as chief executive, handing the running of the fund, Abraaj Investment Management Ltd, to the two co-chief executives.

Read: Founder of Dubai private equity firm Abraaj hands over control of fund

Naqvi, who will still remain CEO of Abraaj Holdings, founded the firm in 2002 and turned it into an emerging market powerhouse with $13.6bn in assets, deploying cash in Africa, Asia, Latin America, the Middle East and Turkey.

The bulk was supposed to come from outside the region, mainly from retirement funds in North America and Asia, another source said.

Abraaj would have invested in real estate, education, healthcare, renewable energy and credit, the source said, and possibly technology.

Abraaj declined to comment.

Abraaj had said last week it had decided to pause investment activities temporarily, other than on transactions for which commitments are already final, until the reorganisation is complete.

The announcement comes after a dispute between Abraaj and four of its investors over the use of their money in a healthcare fund.

Read: Dubai’s Abraaj denies wrongdoing related to $1bn healthcare fund

The investors, which included the Bill & Melinda Gates Foundation and World Bank’s arm IFC, had separately hired forensic accountants Ankura Consulting to investigate how funds were used in the Abraaj Healthcare Fund, Reuters reported last week, citing a source close to one of the firms.

The Gates Foundation and IFC have declined to comment on the dispute.

Abraaj said on February 7 that auditor KPMG had reviewed and found all such payments and receipts were verified and unused capital was returned to investors.

KPMG declined to comment.

The two CEOs, Omar Lodhi and Selcuk Yorgancioglu, are also holding meetings and conference calls with institutional investors to allay concerns over recent changes at the fund, another source told Reuters.

Independent specialist consultants are working on the review of its corporate structure, focusing on governance and control functions, Abraaj said.