Abraaj’s Naqvi relinquishes control of funds business in major reshuffle

Arif Naqvi, the founder of the Middle East’s biggest private equity investor, Abraaj Group, is relinquishing control of the firm’s fund management business in a reshuffle following allegations funds earmarked for healthcare projects in the developing world were misused.

Abraaj, which was founded in 2002 and has about $13.6 billion of assets under management, on Friday announced broad changes to the firm’s governance and operating model and the appointing of a new leadership team, which it said is aimed at boosting performance through “governance and accountability”.

Omar Lodhi and Selcuk Yorgancioglu, two partners with the firm, have been promoted to co-chief executives of the fund management business, Abraaj Investment Management Limited (AIML), which will have an independent board of directors. The re-organisation follows Abraaj coming under fire in recent weeks after US media reported some of the 24 investors in the Abraaj Growth Markets Health Fund (AGHF) hired forensic accountants to investigate the possible misuse of money invested in the fund.

The concerned investors include the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation, Britain’s CDC Group and Proparco Group of France.

Abraaj dismissed the reports as “inaccurate and misleading” and said unused capital in AGHF was returned in December following discussions with investors. On February 8 the company said a KPMG review of the firm’s health fund found no misuse of funds. Mr Naqvi declined to comment when reached by The National.

As part of the re-organisation drive, AIML has commissioned a review of its corporate structure with focus on governance and control functions. It has hired independent consultants for the job.

Given the breadth of structural and management changes and ongoing review, Abraaj has decided to temporarily suspend deployment of capital other than on the transactions for which commitments are already final, it said without specifying how long the suspension will remain in effect.

“This has in no way slowed Abraaj’s momentum in deal sourcing and transaction negotiations that are performed by investment teams across its markets,” according to the statement. Mr Lodhi and Mr Yorgancioglu are assuming their new roles with immediate effect. Both have been with the firm for over 10 years and were respectively partners for the Abraaj Group’s Asia and Turkey businesses. The fund management business will continue to oversee the operations of all of Abraaj’s funds globally on behalf of institutional investors.

Mr Naqvi will remain chief executive of Abraaj Holdings and will retain a non-executive role as a member of the global investment committee of AIML.

“This transition allows me to dedicate more time to developing new platforms that can strengthen the compact between business and society,” he said. In the last 16 years, the Dubai-based firm has expanded in regions including Asia, Africa, the Middle East, Turkey and Latin America. Only 17 per cent of Abraaj’s portfolio is now in the Middle East, Naqvi said at a conference in November.

The company has a stake in Tunisie Telecom which it purchased from the telecoms investment unit of Dubai Holding in December. Abraaj is bullish on prospects of investing in Saudi Arabia and may acquire assets in the Arab world’s biggest economy, as the kingdom continues to encourage foreign investments, Mr Naqvi told The

National in October.