It’s an old industry adage: it takes a long time to kill off a private equity firm.

Maybe the maxim needs updating. In just four months, Abraaj Group has gone from being arguably the highest profile emerging markets private equity investor to a damaged brand on the brink of liquidation.

News this week gave us some clarity: Abraaj Holdings has filed for provisional liquidation while the fund management business, which controls a portfolio of around 50 companies, will be sold.

“The provisional liquidation of Abraaj Holdings will create a more controlled basis for moving forward, without impacting the day to day management of the funds and the underlying portfolio businesses,” said Abraaj founder Arif Naqvi in a statement released on Thursday. “An independent [Abraaj Investment Management Limited], under new ownership, will be stabilising for all who are associated with the asset management business.”

The whole episode has, for private equity, been unprecedented. And it has implications for the wider industry. MENA-based managers fear contagion from the events will affect fundraising in a market that is already a bit-player in global private equity. “Has it harmed the region? Unquestionably yes,” one veteran fundraiser told PEI in early June. GPs would do well to wait until after the summer or even as late as 2019 before seeking capital from global LPs, he said.

When Enron unravelled, the shock was big enough to prompt the eradication of one of the “Big Five” audit firms and the introduction of the Sarbanes-Oxley Act, a mammoth piece of regulation that imposed numerous new standards on company boards, management and auditors.

Abraaj, however, will not be private equity’s Enron. Despite Naqvi’s meteoric success in catapulting the firm to the big league in terms of assets under management – it ranked 42nd in 2017’s PEI 300 – the firm would only have confirmed its place among private equity’s blue-chip names if it had fulfilled its plan to raise a $6 billion global fund.

The firm managed to corral $3 billion from a number of investors including US public pensions. It seems alarming in hindsight that a firm so close to extinction should have been able to attract commitments on that scale from established investors. But as one limited partner noted: looking from the outside, there was no way of knowing anything was amiss. Indeed, while governance and internal controls have shown to be wanting, there is as yet no real smoking gun in terms of malfeasance.

In terms of the fundraising, we hear that a large cornerstone investment from an established firm – the name of which we have yet to confirm – gave other investors comfort.

While an Enron-style earthquake in private equity is unlikely, investors in will look hard at whether current fund due diligence practice goes far enough.

Write to the author: toby.m@peimedia.com