The anonymous tip came out of the blue. “There is a cover-up inside the finance team,” the email read. “Investors are asking for bank statements and money movement which Abraaj is not providing.”

It was early 2018 and the editorial team at Private Equity International received a steady drip of emails from someone claiming to have knowledge of senior resignations at Abraaj – at that time the private equity industry’s best-known emerging markets investment firm.

What followed was a saga, news of which was first broken by The Wall Street Journal in February of that year, that led to the ultimate downfall of a firm that once managed almost $14 billion in assets on behalf of major global investors including the International Finance Corporation, the Bill and Melinda Gates Foundation and French government organisation Proparco.

At the heart of the matter were claims that Abraaj, which was founded by Pakistani businessman Arif Naqvi and was headquartered in Dubai, had misappropriated over $230 million related to its $1 billion 2015-vintage Growth Markets Health Fund. LPs were reported to have hired an accounting firm to help trace capital that was to be invested in medical projects in India, Pakistan, Kenya and Nigeria.

Called to a halt

By late February, Naqvi had stepped aside, and the firm had paused all fundraising and new deployment activities. By early March, the firm had released investors from its Abraaj Private Equity Fund VI global flagship vehicle, which was seeking $6 billion. On 8 March, PEI reported that Abraaj had cancelled its annual investor week in Dubai – an event known for its lavishness and opulence, despite the firm’s focus on helping build businesses in some of the world’s poorest countries.

Departures came next, including that of chief financial officer Ashish Dave and managing partner Sev Vettivetpillai. Dave, Vettivetpillai and Naqvi himself, as well as three other senior executives, would later be charged on counts including wire fraud and conspiracy. 

By June, the firm had filed for a court-supervised restructuring in the Cayman Islands, and was seeking to appoint PwC as provisional liquidator.

One of the more memorable documents we came across while reporting on these events was a creditor document detailing the sale of 367 pieces of art, held in Abraaj’s name and insured to the value of $22 million, which were to be auctioned as part of the firm’s liquidation in October 2018. It was hard to believe that a firm once regarded as the darling of so-called growth markets investing, and one that appeared to have cracked the code for combining impact investing with making PE-level returns, was going through a fire sale.

Taking stock

What are the lessons from Abraaj’s downfall? Speaking in July 2021 to Toby Mitchenall, editor of affiliate title New Private Markets, Simon Clark, co-author of The Key Man, which chronicles the rise and fall of the firm, said that a broader conversation around poverty and impact investing was long overdue.

“To have conversations about the global economy and poverty with only relatively wealthy or rich people in the room should become as unacceptable as a room full of men talking about gender equality,” Clark said.

“It’s not about demonising anyone, or any company, or any industry, or any geography. There is a need for a genuinely inclusive conversation where people who haven’t necessarily listened to each other before do start to listen to each other.”

Adam Le is senior editor, private equity, EMEA at PEI Group.