The development is a reflection of how some of the fund’s investors are keen to sever ties with Dubai-based Abraaj ahead of TPG taking over the management of the fund.
Abraaj’s $1 billion healthcare fund interim manager, AlixPartners, has decided to redistribute the troubled private equity firm’s stake in the fund to its other investors.
This has prompted local banks whose loans to Abraaj were secured against the stake in the fund to consider legal action against AlixPartners, as the decision leaves them facing the prospect of no returns.
The Growth Markets Health Fund is the epicentre of Abraaj’s problems after investors such as the Bill & Melinda Gates Foundation and International Finance Corp (IFC) last year allegedly accused the private equity firm of misusing the fund’s money. Abraaj has since denied any wrongdoing.
The accusations triggered months of turmoil at the biggest buyout fund in the Middle East and North Africa, culminating in a process to liquidate the business and sell off its funds.
Lenders, which had been expecting AlixPartners to sell Abraaj’s stake in the fund to other partners or dilute the stake, view the move as the worst possible scenario for them, reported Reuters.