Dubai-based private equity firm Abraaj Group has issued a statement denying wrongdoing amid claims it misused investments in a $1bn healthcare fund.
The Wall Street Journal (WSJ) reported on February 2 that the Bill & Melinda Gates Foundation, the World Bank’s International Finance Corporation and government-backed development finance organisations CDC Group and Proparco Group had hired a forensic accountant to find out what had happened to some of their money.
The four provided about a quarter of investments in the Abraaj Growth Markets Health Fund and want to know what happened to more than $200m that they and others have provided that was not spent, sources told the publication.
US advisory group Ankura Consulting has been hired by the group to audit the fund and trace the money, the WSJ said.
In a statement issued on Sunday, Abraaj described reports regarding the matter as “inaccurate and misleading” and said the fund had served almost two million people through 24 hospitals, 30 diagnostic centres and 17 clinics over 18 months.
However, it suggested that capital deployment was “less predictable” in growth markets due to a lack of mature healthcare assets.
“All capital that was drawn from AGHF investors was for approved fund investments. Some capital was not used as quickly as anticipated due to unforeseen political and regulatory developments in several of the fund’s operating markets,” according to the statement.
“These delays were regularly communicated to investors through quarterly general partner reports and other investor communications.”
The company went on to say that the terms of limited partnership agreements signed by investors allowed the fund to retain called capital in situations where an investment is delayed and still approved but not cancelled.
But following discussions with investors it “returned unused capital” to them at the end of December 2017.
Abraaj said it had hired KPMG to verify all receipts and payments made by the fund.
“We are confident that the exercise being conducted by KPMG will confirm that all the funds were accounted for and used appropriately,” it added.
Abraaj manages $13.6bn of investments in Africa, Asia, Latin America, the Middle East and Turkey.