Abraaj pauses fundraising as founder steps aside

Abraaj has stopped fundraising and deploying capital as founder and chief executive Arif Naqvi passes leadership of its fund management business to two co-chief executives.

Omar Lodhi and Selcuk Yorgancioglu, former partners in Abraaj’s Asia and Turkey businesses respectively, will take over leadership of Abraaj Investment Management Limited, its fund management business, with immediate effect, according to a statement. The pair will take over operations of its funds and portfolio, which have split from Abraaj Holdings. Naqvi remains chief executive of the latter and a non-executive member of AIML’s global investment committee.

Managing partners and investment committee members Mustafa Abdel-Wadood, Wahid Hamid and Sev Vettivetpillai will stay on at AIML “to ensure an orderly implementation of the new management structure and governance systems,” the statement noted.

“Abraaj has decided to pause its deployment activities temporarily, other than on transactions for which commitments are already final”

AIML has commissioned a “comprehensive review” of its corporate structure that will focus on areas such as governance and control functions, the statement said. The firm will have an independent board of directors to which internal audit and compliance will directly report.

It is understood that the pause on investment and fundraising could take as long as three months as the review is completed.

“Given the breadth of structural and management changes and ongoing review, Abraaj has decided to pause its deployment activities temporarily, other than on transactions for which commitments are already final, until the re-organisation is complete,” the statement said. “This has in no way slowed Abraaj’s momentum in deal sourcing and transaction negotiations that are performed by investment teams across its markets.”

Global fund

The news comes following a tumultuous few weeks for the firm, which has become one of the most significant investors in emerging markets since it was established in 2002. It was caught up in a dispute with four investors in its $1 billion 2015-vintage Abraaj Growth Markets Health Fund, which centers on the treatment of capital that had been drawn down but not invested.

Abraaj is trying to raise a $6 billion global fund and had already attracted sizable commitments from the likes of  Washington State Investment Board, Teacher Retirement System of Texas and Teachers’ Retirement System of Louisiana. Progress on the fundraise is difficult to ascertain, though recent reports say the firm has attracted $3 billion in commitments. The firm declined to comment on fundraising when PEI, our sister publication, spoke with them in late July.

It is from that fund that the firm likely made its investment in Colombian food manufacturer QBCo, in which it acquired a majority stake in October, hoping to benefit from increasing acceptance of private-label food among consumers in Latin America.

In May, the firm invested $25 million into Ghanaian dairy products portfolio company Fan Milk, alongside France’s Danone. It had previously bought a stake in the sub-Saharan fertilizer subsidiary of Singaporean petrochemicals group Indorama – through unspecified Africa-focused funds – in October 2016.

Toby Mitchenall, Adam Le and Matthieu Favas contributed to this report.