Bidders emerge for Abraaj’s investment unit after Colony Capital offer rejected

Several potential buyers have emerged for Middle East buyout firm Abraaj’s investment management business as a revised offer from previous frontrunner Colony Capital was rejected, say sources familiar with the matter.

The bids by Cerberus Capital Management, York Capital Management and Abu Dhabi Financial Group (ADFG) will be considered by Dubai-based Abraaj’s newly-appointed liquidation committee, which was established this week to help steer the company’s future, said the sources.

Abraaj filed for provisional liquidation in the Cayman Islands last month after months of turmoil at the Middle East and Africa’s largest private equity firm in the wake of a row with investors over the use of their money in a $1bn healthcare fund. Abraaj denies any wrongdoing.

Abraaj’s joint provisional liquidators, PwC and Deloitte, are seeking a buyer for Abraaj Investment Management Limited as they seek to safeguard the funds and repay creditors.

The delay caused by the rejection of Colony’s offer would add to the time taken to strike a deal, said two sources, potentially eroding asset values.

Of the bids currently under consideration by the liquidation committee, which includes representatives of unsecured and secured creditors, only Cerberus had so far conducted the due diligence required before a deal can be completed, said one of the sources.

Neither Abraaj, PwC or Deloitte immediately responded to a request for comment.

United States-based Colony had initially emerged as the frontrunner for the business but its offer of $229.3m to buy the company’s management rights and limited partner stakes of six funds ran into difficulties after some investors wanted a review of Abraaj’s handling of funds, according to a report by Abraaj Holdings’ provisional liquidators, PwC.

Colony has since submitted a revised offer but that was rejected, said one of the sources.

Colony declined to comment.

York Capital’s offer was $45m for the management rights of the investment management business, said two sources, while ADFG’s offer was $55m, including $30m for the management rights and the balance for liquidity support, said two of the sources. Reuters was unable to verify Cerberus Capital’s offer.

York Capital, ADFG and Cerberus did not immediately respond to a request for comment.