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Abu Dhabi, UAESaturday 23 June 2018

Abraaj says KPMG review finds no evidence of fund misuse

Review follows reports the private equity firm had misappropriated health fund money

Abraaj, aprivate equity firm with $13.6 billion in assets under management, said a KPMG review of the firm’s health fund found no misuse following media reports that said investors including the Bill & Melinda Gates Foundation were concerned about the possible misappropriation of money.

Last week, Dubai-based Abraaj dismissed as “inaccurate and misleading” media reports that said it misused funds earmarked for healthcare projects in the developing world. It had hired auditing firm KPMG in January "to verify all receipts and payments made by the fund."

The Wall Street Journal and The New York Times claimed that some of the 24 investors in the Abraaj Growth Markets Health Fund (AGHF), including large development donors, have hired forensic accountants to investigate what had happened to some of the money invested in the fund.

“KPMG has now completed its findings and reported that all such payments and receipts have been verified, in line with the agreed upon procedures performed and that unused capital was returned to investors," said Abraaj said in a statement on Thursday.

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Investors in the fund include the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation (IFC), Britain’s CDC Group and Proparco Group of France, the Journal reported, citing sources familiar with the matter.

Private equity groups such as Abraaj, IFC and CDC – part of the UK’s Department for International Development – play an increasingly large role in international development, investing in projects in developing market projects that boost local economies while providing attractive returns for investors.

The Times claimed the missing funds amounted to over $200 million, and that investors feared that Abraaj had misused the money for its own purposes, citing people briefed on the matter.

Abraaj said last week that the terms of the limited partnership agreement allow the fund to retain called capital “in situations where an investment is delayed but still approved and not cancelled.”

The group returned the unused capital in December, following discussions with investors, it said.

Abraaj has engaged KPMG to verify “all receipts and payments made by the Fund in accordance with the International Standard on Related Services applicable to agreed-upon procedures engagements”.

“Some capital was not used as quickly as anticipated due to unforeseen political and regulatory developments in several of the Fund’s operating markets," Abraaj said last week. "These delays were regularly communicated to investors through quarterly General Partner Reports and other investor communications.”