Abraaj could receive $22m in carry from previous funds

Carried interest may be drawn from some vehicles regardless of the outcome of the Abraaj platform sale, according to a report by Deloitte seen by PEI.

Abraaj Group may still receive carried interest from some of its vehicles as the Dubai-headquartered private equity firm undergoes provisional liquidation.

Abraaj Holdings, which split from the fund management business in February, held $22 million in carried interest on its balance sheet as of August, according to a report prepared by joint provisional liquidator Deloitte seen by Private Equity International.

“Through their review of the available documentation to date, the JPLs understand that the [limited partnership agreements] of each Abraaj fund contain a ‘waterfall’, which enshrines the right to [carried interest],” the report noted.

Employees entitled to receive carried interest include Abraaj investment professionals “devoted” to the fund and global team members, according to the report.

Carry can only be realised once the invested capital and the hurdle rate have been paid to the LPs of the relevant underlying funds, and no carry related to the current generation of funds has been paid out, the report noted. Some Abraaj funds contained “further LP protection mechanics” such as escrow accounts and/or guarantees that ensure the correct amount of carry is paid out, and that it is not paid too soon.

Abraaj employees who have left the firm will forfeit all or a portion of their carried interest “depending on the relevant circumstances of leaving”.

Regardless of the outcome of the sale of the Abraaj platform, the JPLs believe there may be value that can be attributed as carried interest and are working to “quantify that value”, according to the report.

Deloitte and PwC were appointed as JPLs in June to restructure Abraaj Holdings and the fund management business and sell their assets. Reports first emerged in February that LPs in Abraaj’s $1 billion global healthcare fund had hired an auditor to trace money.

A spokeswoman for Deloitte declined to comment.

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