Events like the downfall of the Abraaj Group will prompt institutional investors to invest more time and money into operational due diligence, according to Andrea Auerbach, head of private markets at Cambridge Associates.
Abraaj, once a powerful force in emerging markets private equity, has been all but destroyed amid allegations that it misused investor capital having built up substantial debt. Despite what later turned out to be inadequate internal controls, the firm had managed to raise half of a planned $6 billion fund from investors, including US public pensions.
Speaking to PEI as part of an in-depth interview, Auerbach said that while she could not comment on Abraaj specifically, such situations will cause “greater inclusion of operational due diligence in the market more broadly, and that will require more resource”.
Watch the full-length 25-minute interview, in which Auerbach discusses fundraising trends, slowing returns and the reaction to Abraaj.