Abraaj Holdings, once the leading global investor in the developing world, has filed a court-supervised restructuring in the Cayman Islands amid claims of misused funds.
According to the firm’s statement, the application is meant to safeguard the rights of stakeholders and restructure its debts. In addition, the filing seeks to employ PwC as the provisional liquidator, which will place a halt to all unsecured claims.
Abraaj founder Arif Naqvi said in a statement: “The filling will create a more controlled basis for moving forward, without impacting the day-to-day management of the funds and the underlying portfolio businesses. The process of court-supervised restructuring will take a few months. I will continue to support this orderly process and help ensure the best possible outcomes for all the stakeholders.”
Senior analyst Richard Segal at Manulife Asset Management Limited in London said: “This will bring it all to an end over time and this is the best way to go about it, meaning most fair for everyone. But the fact that they are at this stage means it is still a guess how long the process will take and what will be left.”
The application will also protect the company from filings made by some creditors such as Kuwait’s Public Institution for Social Security and Auctus Fund Limited.
Allegations of Misappropriation of Funds
The filing comes less than five months after some of the company’s investors such as Bill & Melinda Gates Foundation ordered for an audit to look into the alleged misuse of money in Abraaj’s healthcare fund.
According to a Deloitte report presented to creditors this month, the healthcare fund is a combination of “Abraaj’s own money and its fourth private equity fund.” The company owes the Private Equity Fund IV $94.6 million. However, all the money has been accounted for and there is no proof of embezzlement or misuse of funds.
Naqvi relinquished fund management control in February but he has remained the CEO of Abraaj Holdings.
The company, which once managed nearly $14 for supranational agencies and institutions, is facing rising concerns about its viability thanks to the allegations brought against it.