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Abraaj dismantling expected to begin in December

Colony Capital’s acquisition of the firm’s LatAm business is the most progressed of the sales processes underway for Abraaj funds, according to documents seen by PEI.

Abraaj Group’s dismantling is expected to begin in December with Colony Capital’s acquisition of the emerging markets private equity firm’s Latin America business.

Joint provisional liquidators Deloitte and PwC are in discussions with Los Angeles-based real estate investor Colony over an asset purchase agreement for the division, according to a Deloitte report seen by Private Equity International. The deal is expected to complete next month, subject to obtaining the necessary limited partner consent and court sanction.

Abraaj’s Latin America business was present in Mexico City, Bogota and Lima, according to its website. Colony, which does not have offices in Latin America, invests globally and has outposts in Europe, Asia and the Middle East, in addition to 10 US offices.

The Colony transaction is the most progressed of the sales processes underway for various Abraaj funds, the documents noted.

Actis is in exclusive negotiations for the purchase of Abraaj’s Africa and South-East Asia businesses, as well as APEF IV, a $2 billion 2011-vintage, per PEI data. The firm – which would take on the relevant fund management teams and a number of the Dubai-based staff – is conducting customer due diligence checks on Abraaj’s portfolio and engaging with LPs to progress “LPA mark-ups” and perform due diligence on their investors.

Its African vehicles include the $990 million Abraaj Africa Fund III and the $375 million Abraaj North Africa Fund II, both 2013-vintages, according to PEI data.

Conversations were “ongoing” with Brookfield Asset Management as of 6 November – the date of the report – regarding the acquisition of Abraaj’s Turkey funds. Brookfield is not in exclusivity and the JPLs are talking to other parties who remain interested in managing the funds.

Abraaj raised $526 million for its 2014-vintage Abraaj Turkey Fund, according to PEI data.

The JPLs are still assessing options for the MENA legacy funds: Infrastructure and Growth Capital Fund, Abraaj Real Estate Fund, property fund ASAS and Abraaj Buyout Fund I and II. Possible solutions include expanding the Actis transaction to include these vehicles or accepting a proposal from a large unnamed US-based firm, which would involve a new company managing the funds and selling their assets in an orderly fashion, according to the report.

US private equity firm TPG is in exclusive talks to manage the Abraaj Global Healthcare Fund and the process is expected to conclude by the end of the year, according to a source with knowledge of the matter. The transition follows a dispute between the JPLs and advisory firm AlixPartners, which has managed the fund since July, over the latter’s decision to issue forfeiture notices to Abraaj’s stakes in its own funds.

AKBAR PADAMSEE, Untitled (Metascape). Credit: Bonhams. Abraaj artwork raised £4.65 million ($6 million; €5.3 million) at auction in October.

“The effect of the forfeiture notices, if valid, would be that the Abraaj LPs would not receive any distributions relating to their LP stake until all other LPs receive their investment and the required preferred return,” the documents said.

“In addition, Abraaj LPs would no longer be considered LPs of AGHF but would be treated as creditors. The JPLs dispute the validity of the forfeiture of the company’s LP stake and have asserted this in writing to AlixPartners.”

Abraaj founder Arif Naqvi made an unsuccessful last ditch attempt in August to prevent the firm’s downfall, PEI reported on Monday. Naqvi’s proposal included an offer to give up carry in return for being released from claims against him and the appointment of a chief restructuring officer to oversee the disposal of LP stakes and other assets over a period of several years.

Deloitte, Colony Capital, Brookfield, Actis, TPG and AlixPartners declined to comment.