Abu Dhabi, UAESunday 8 December 2019

British private equity firm Actis to take over two Abraaj funds

Actis will take over the management rights of Abraaj Private Equity Fund IV and Abraaj Africa Fund III

Arif Naqvi, founder and chief executive officer of Abraaj, was sentenced to three years in prison by a UAE court. Bloomberg
Arif Naqvi, founder and chief executive officer of Abraaj, was sentenced to three years in prison by a UAE court. Bloomberg

British private equity firm Actis acquired the rights to manage two funds previously run by the now defunct buyout firm Abraaj, the company said on Monday.

Actis, which manages $12 billion in assets, had been manoeuvring since January to take over Abraaj’s funds and said it was invited to step in to provide a solution that was acceptable to investors, known as Limited Partners (LPs), of the two funds and liquidators of Abraaj.

“We are pleased that investors have entrusted us with the stewardship of their portfolio and our focus is now on delivering on our plan to drive value on their behalf,” Andrew Newington, Actis’ chief investment officer said in a statement.

Under the agreement, Actis is taking over the management rights of the $1.6 billion Abraaj Private Equity Fund IV and Abraaj Africa Fund III, it said in a statement. The deal includes investments in 14 portfolio companies across the two funds, bolstering Actis’ operations in Africa and the Middle East.

Abraaj Africa Fund III focuses on investment in sub-Saharan Africa. Abraaj’s APEF IV, also known as Fund 4 or Fund IV was set up to invest in greenfield projects, privatisations, growth capital opportunities and buyouts in the Middle East, North Africa, South Asia and the Levant region.

Arif Naqvi, the founder of Abraaj and five other senior executives of the firm are alleged to have raided Fund 4 to plug shortfalls, obligations and meet due payments, according to an indictment issued by the US Southern District of New York. The 78-page charge sheet claims the largest target of Abraaj’s systematic misappropriation of investor money was Fund 4. According to legal documents seen by The National, Abraaj allegedly misused as much as $300 million from the fund.

Investors in Fund IV included members of royal families in the Arab world, high-net-worth individuals, pension funds, US banks, Hamilton Lane and Falcon Flight among others.

Abraaj, which claimed to have managed almost $14bn in funds, was forced into liquidation in June of last year after a group of investors, including the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation and The Overseas Private Investment Corporation (Opic), a US government agency, commissioned an audit to investigate the alleged mismanagement of money in its $1bn healthcare fund. That investigation increased scrutiny of the firm and the alleged misappropriation of funds of US investors and a US government agency attracted the attention of the Securities and Exchange Commission and other US authorities.

According to the US charge sheet Mr Naqvi along with Waqar Siddique, a managing partner, Rafique Lakhani, a managing director, Mustafa Abdel-Wadood, a managing partner, Ashish Dave, the company’s chief financial officer, and Sivendran Vettivetpillai, a managing partner, “deceived and defrauded existing and potential investors in the US and elsewhere, including US financial institutions, US retirement and pension funds, US investment advisors, a US philanthropic foundation and an agency of the US government”.

Mr Naqvi is out on $20 million bail in the UK awaiting extradition to the US, along with Mr Vettivetpillai, who is also out on bail in the UK. Mr Abdel-Wadood, who was arrested in New York, is out on $10m bail but restricted to his home.

Last month in a US court hearing, Mr Abdul-Wadood pleaded guilty to conspiracy charges and agreed to cooperate with the US inquiry into a fundraising scheme that helped lead to the world’s biggest private-equity insolvency last year.

In May US private equity firm TPG took over the management of Abraaj’s $1bn healthcare fund, which it renamed Evercare Healthcare Fund.

Updated: July 15, 2019 08:29 PM