The Abraaj Group

The Abraaj Group was a private equity firm operating in six continents.[1] The firm was founded by Pakistani businessman Arif Naqvi and was based in Dubai, United Arab Emirates.

The Abraaj Group
IndustryFinancial Services
FateLiquidation
SuccessorsTPG Capital, Actis Capital, Colony Capital
Founded2002 (2002)
FounderArif Naqvi
Defunct2018
HeadquartersDubai, United Arab Emirates
ProductsInvestments, private equity funds
Total assetsc. US$13.6 billion
Number of employees
300

History

The Abraaj Group was founded in 2002 by Pakistani businessman Arif Naqvi with US$3 million in capital.[2] In April 2015, the firm closed a US$990 million Sub-Saharan Africa fund, its third in the region according to the company.[3] Combined with US$375 million raised in August 2015 for a fund that will focus on North Africa,[4] the two funds give Abraaj just under US$1.4 billion to invest in Africa, a record sum raised in a single year.[5]

In July 2016, the firm announced that it raised $526 million for investments in Turkey through Abraaj Turkey Fund I.[6] Abraaj also launched its $1 billion Abraaj Growth Markets Health Fund (AGHF) to build affordable and accessible health eco-systems for middle and low-income communities in Sub Saharan Africa and South Asia.[7]

In 2018 the firm was hit by turmoil,[8] as it was revealed that several limited partners including the Gates Foundation were investigating its misuse of investor funds and appointed an auditor to trace the money.[9] This led to the departure of the CFO[10] as well as the CEO to handover his role at the fund business.[10][11]

Abraaj was hit by a $188 million loss for the nine months until the end of March with Abraaj’s debts standing at $1.1 billion, including $501.4 million to unsecured creditors and $572.4 million to secured creditors.[12] In April 2019, a third director, Sev Vettivetpillai, was arrested.[13]

In July 2019, following a 18-month investigation, the Dubai Financial Services Authority imposed a fine of US$315 million on Abraaj for deceiving investors, misusing investor funds to cover operational expenses, and carrying out unauthorized activities.[14] The fine comes after the June indictment of Arif Naqvi and other senior executives by US prosecutors on charges of defrauding investors. The US claims that, as the firm’s finances deteriorated, Naqvi instructed management to use investor funds to cover payroll and financing costs, as well as personally misappropriated over US$250 million.[15][16]

Eventually, Abraaj's various funds were sold to other private equity firms. Colony Capital took over Abraaj's Latin America business. Actis Capital took over the private equity businesses in the Middle East, Africa and Asia, and TPG Capital's Rise Fund took over the firm's healthcare business.

Business Segments

Prior to its liquidation, the Abraaj Group invested in private equity, private credit, impact investing and real estate.[17]

Private Equity

The Abraaj Group was an investor in global growth markets and had made more than 200 investments across a range of sectors. These businesses included:

  • Acurio, a Peruvian restaurant group[18]
  • Hepsiburada, the largest e-commerce player in Turkey[19]
  • Java House Group, East Africa's largest casual dining chain[20][21]
  • Netlog, largest integrated logistics firm in Turkey[22]
  • Indorama Fertilizers, fertilizer manufacturer in Sub-Saharan Africa[23]
  • VUS, an education leader in Vietnam[24]
  • Big Basket, e-grocer in India[25]
  • ODM, Moroccan oncology and diagnostic services healthcare platform[26]

Private Credit

Abraaj built a portfolio of private credit investments, diversified across sector and geography in emerging markets. According to the company, it sought to invest primarily in mezzanine debt, but could also invest in senior debt.[27]

Impact Investing

Abraaj's impact investing line of business included healthcare and clean energy.

Abraaj's US$1 billion Fund brought together healthcare technology companies, foundations, development financing institutions and institutional investors, to address and impact poor healthcare outcomes in Africa and Asia.[28] Its healthcare investments included Care Hospitals in India[29] and Islamabad Diagnostic Centre in Pakistan.[30] In September 2017, the firm announced a partnership with the International Federation of Red Cross and Red Crescent Societies in Kenya to provide education, primary care interventions and more complex treatment for NCDs, communicable diseases and mother/child healthcare.[31]

As of September 2017, the firm had invested over US$1 billion in energy, including a partnership with ENGIE to develop a wind power platform in India.[32] In January 2017, Abraaj acquired a majority stake in Jhimpir Power, to construct a 50 MW wind project in the Jhimpir wind corridor in Southeast Pakistan.[33] In 2015, the firm announced a partnership with Aditya Birla Group to build a 1GW scale solar energy platform in India.[34]

In May 2019, after the forced liquidation of Abraaj, U.S. private equity firm TPG signed a definitive agreement to take over the healthcare fund.[35]

Real Estate

Abraaj’s Real Estate Investment Team invested in a range of real estate asset classes, focusing on attractive returns derived from underlying growth fundamentals such as urbanization and increased consumer spending.[36]

Energy

Abraaj's energy team, branded as Themis, left the company in December 2017 to partner with a US investment firm. The Themis team relocated to Morocco with the objective of refocusing on the African power market.[37]

Sustainability Initiatives

In 2012, The Abraaj Group became a signatory to the UN Global Compact and that same year, UN Secretary-General Ban Ki-moon appointed CEO Arif Naqvi to the Board of the Global Compact.[38]

In 2014, Abraaj established the Abraaj RCA Innovation Scholarship at the Royal College of Art in London. It was the largest scholarship of its kind for postgraduate studies in the creative sector.[39] The Abraaj Group Art Prize, the group's flagship arts patronage program, aimed at empowering potential and gives often under-represented contemporary artists the resources to further develop their talent.[40] The prize celebrated its 10th anniversary in 2018.

In 2015, Abraaj established the Abraaj Growth Markets Grant to support projects aimed at resolving socio-economic challenges in growth markets. Nine projects were selected ranging from developing myoelectric prosthetic limbs in Kolkata to tracking crime patterns for a safer culture in Puebla.[41]

References
  1. "Will ambitious global health strategy survive the Abraaj scandal? (podcast)". Impactalpha.com. 16 July 2018. Retrieved 23 June 2019.
  2. Nair, Dinesh; Martin, Matthew; Alloway, Tracy (29 July 2018). "Behind the Spectacular Collapse of a Private Equity Titan". Bloomberg News. Retrieved 31 July 2018.
  3. Saleem, Nadia (13 April 2015). "Private equity house Abraaj closes $990 mln sub-Saharan Africa fund". Reuters.com. Retrieved 10 May 2015.
  4. Martin, Matthew (24 August 2015). "Abraaj Group Raises $375 Million for North Africa Investments". Bloomberg.com. Retrieved 31 October 2016.
  5. Cotterill, Joseph (24 August 2015). "Africa private equity group raises $1.4bn to invest in continent". Financial Times.
  6. "The Abraaj Group: Press Release: The Abraaj Group Raises $526 million for Investment in Turkey". Abraaj.com. Retrieved 2016-09-12.
  7. Jr, Landon Thomas (2016-10-08). "An Investor's Plan to Transplant Private Health Care in Africa". The New York Times. ISSN 0362-4331. Retrieved 2017-11-04.
  8. "Private equity firm Abraaj Capital is in turmoil". Axios.com. Retrieved 2018-03-29.
  9. Louch, William; Ballard, Ed; Clark, Simon (2018-02-02). "Abraaj Investors Hire Auditor to Trace Money". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-03-29.
  10. Anthony Karam, Mark. "Abraaj court case verdict on July 15: Amicable parting, or legal battle?". Ameinfo.com. Retrieved 2018-07-12.
  11. Parasie, Nicolas; Louch, William; Clark, Simon (2018-03-26). "Abraaj Seeks Buyer for Private-Equity Business". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-03-29.
  12. Khatib, Hadi. "Who's owed what and 7 things you need to know about Abraaj". Ameinfo.com. Retrieved 2018-07-19.
  13. "U.S. Criminal Case Against Abraaj Widens With Third Arrest". Bloomberg.com. 2019-04-18. Retrieved 23 June 2019.
  14. "Abraaj hit with record $315M fine by Dubai regulators | PitchBook". pitchbook.com. Retrieved 2019-08-12.
  15. Clark, Simon. "Abraaj Founder Arif Naqvi Accused of Misappropriating More Than $250 Million in New Indictment". WSJ. Retrieved 2019-08-12.
  16. Warde, Ibrahim (November 2019). "A firm too good to be true, Billion-dollar debts, family pay-offs". Le Monde diplomatique.
  17. "Abraaj Investment Management ... vs Mr. Neville Tuli on 14 July, 2015". Indiankanoon.org. Retrieved 31 October 2016.
  18. "The Abraaj Group: Press Release: Aureos Invests in Leading Peruvian Restaurant Group". Abraaj.com. Retrieved 31 October 2016.
  19. Cotterill, Joseph (22 February 2015). "Abraaj takes $100m stake in Hepsiburada".
  20. Stevis, Matina (2017-07-03). "Abraaj Acquires Kenya-Based Java House Group". Wall Street Journal. ISSN 0099-9660. Retrieved 2017-11-04.
  21. "Abraaj Group to buy African coffee chain Java House". Financial Times.
  22. "Turkey's robust growth tempts private equity firms". Financial Times.
  23. "The Abraaj Group Backs Nigeria-based Indorama Fertilizers (Sub-Saharan Africa) - EMPEA". EMPEA. Retrieved 2017-11-04.
  24. "Vietnam-USA Society English International (VUS) - The Abraaj Group". The Abraaj Group. Retrieved 2017-11-04.
  25. Editorial, Reuters. "BigBasket raises $150 million in funding led by Abraaj Group". IN. Retrieved 2017-11-04.
  26. "Abraaj acquires majoriy stakes in two Morocco oncology clinics". The National. Retrieved 2017-11-04.
  27. "Abraaj fuels growth markets with credit – ImpactAlpha". ImpactAlpha. 2017-07-26. Retrieved 2017-11-04.
  28. "Better Business, Better World – BSDC". Report.businesscommission.org. Retrieved 2017-11-04.
  29. "Dubai's Abraaj Group to buy majority stake in India's Care Hospitals". Reuters.
  30. "Abraaj taps into Pakistan". The National. Retrieved 2017-11-04.
  31. "The Abraaj Group and IFRC Sign MoU" (PDF). The Abraaj Group.
  32. Shah, Sneha (2017-09-20). "Abraaj Group has joined hands with ENGIE to set up a wind energy platform in India". The Economic Times. Retrieved 2017-11-04.
  33. "The Abraaj Group to Acquire Majority Stake in Jhimpir Power (Asia) - EMPEA". EMPEA. Retrieved 2017-11-04.
  34. Sengupta, Debjoy (2015-10-07). "Aditya Birla partners Dubai's Abraaj Group for solar plants". The Economic Times. Retrieved 2017-11-04.
  35. "TPG signs deal to takeover management of Abraaj's healthcare fund". Reuters. 2019-05-09. Retrieved 2019-08-12.
  36. "The Abraaj Group: Real Estate". Abraaj.com. Retrieved 31 October 2016.
  37. Louch, William (2018-03-01). "Abraaj Energy Team Departs, Joins U.S. Investment Firm". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-03-29.
  38. "Board Members - UN Global Compact". Unglobalcompact.org. Retrieved 31 October 2016.
  39. "The Abraaj RCA Innovation Scholarship". Rca.ac.uk. Retrieved 31 October 2016.
  40. "Nafas Art Magazine". Universes-in-universe.org. Retrieved 31 October 2016.
  41. "The Abraaj Group: The Abraaj Group announces winners of 'Abraaj Growth Markets' Grant". Abraaj.com. Retrieved 2016-09-12.
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