According to sources close to the case, the Dubai-based ‘Abraaj Group’ is stalling the sale of its North African hospitals business as it is engulfed in allegations of misused money.
The group, while delaying its initial public offering, is trying to resolve issues with its investors. The sale, which was originally planned for the first half until the month of October, is at the final stages of its talks to sell off its 35 per cent holding in CIRA, an Egyptian school operator.
Abraaj has hired Deloitte to examine its business, including its troubled $1 billion healthcare fund after investors questioned an earlier review by KPMG of the embattled fund, people familiar with the matter said.
Abraaj has been trying to stem the fallout from a row with four of its investors, including the Bill and Melinda Gates Foundation and the International Finance Corp (IFC), over the use of their money in the fund.
A Deloitte team, including specialists in forensic services, is working inside Abraaj’s office to help the healthcare fund review its governance and control mechanisms, the sources said.
Although no final decision has been reported yet, the group plans to sell its stake in the school back to shareholders.
Abraaj is cutting jobs and halting fresh investments after allegations that it misused funds in a $1 billion healthcare fund. It’s also returning capital to investors in a new global fund. Founder of the group, Arif Naqvi, is reportedly stepping down after years at the helm as the company reorganizes its structure.
Abraaj hired Citigroup Inc. and EFG-Hermes Holding SAE to run the sale or IPO of its North African hospitals business, sources said in January. The business, which includes about a dozen hospitals and clinics in Egypt, Tunisia and Morocco, is worth as much as $500 million.
CIRA is the largest K-12 education group in Egypt with 24 majority-owned schools operating under the “Futures” brand, according to Abraaj’s website. The buyout firm invested in the business in 2014.
South African food and household products maker Libstar Holdings Pty Ltd., in which Abraaj holds about a 71 per cent stake, this month said it plans to raise about 1.5 billion rand ($126 million) to repay debt and fund expansion by selling new shares on the Johannesburg Stock Exchange.
What was Abraaj’s Chief Risk officer doing? Clearly the risk management function was not fit for purpose?