DUBAI: AlixPartners, the interim manager of Abraaj’s $1 billion healthcare fund, has decided to redistribute the troubled private equity firm’s stake in the fund to its other investors, sources familiar with the matter said.
The move reflects a desire by some of the fund’s other investors to sever ties with Dubai-based Abraaj ahead of TPG taking over the management of the fund, said the sources.
However, it has prompted local banks whose loans to Abraaj were secured against the stake in the fund to consider legal action against AlixPartners, as the decision leaves them facing the prospect of no returns, the sources added.
AlixPartners declined to comment. The sources declined to disclose the size of the stake being redistributed.
The Growth Markets Health Fund has been the source of many of Abraaj’s problems after investors such as the Bill & Melinda Gates Foundation and International Finance Corp (IFC) last year began questioning Abraaj on how it used some of the fund’s money.
That triggered months of turmoil at the biggest buyout fund in the Middle East and North Africa, culminating in a process to liquidate the business and sell off its funds.
Lenders, which had been expecting AlixPartners to sell Abraaj’s stake in the fund to other partners or dilute the stake, view the move as the worst possible scenario for them, the sources said.
TPG is in exclusive talks to add Abraaj’s healthcare fund to its Rise Fund, according to a letter sent by AlixPartners to employees of the fund, seen last month.
Rise is the world’s largest impact fund – funds that aim to deliver social or environmental benefits as well as financial returns. It has around $2.1 billion of assets under management.