Cerberus and Colony Are Making New Offers for Abraaj Funds

(Bloomberg) -- Cerberus Capital Management LP and Colony Capital Inc. made new offers to buy Abraaj Group assets as the embattled Dubai-based private equity firm works on a court-supervised restructuring, according to people familiar with the matter.

Cerberus made a bid for all of Abraaj’s funds, but hasn’t offered to buy the limited-partnership stakes in the underlying funds, the people said, asking not to be identified as the information is private. Cerberus was engaged in talks with Abraaj to acquire its funds before Colony reached a principle agreement last month.

Colony, which in June agreed to buy some of Abraaj’s funds and oversee others, made a revised offer for some of the funds, as well as its limited-partnership interests in the underlying funds, the people said. The offers are being reviewed by provisional liquidators Deloitte and PricewaterhouseCoopers and any agreement needs investor approval, the people said.

Commercial discussions on the sale of the firm’s asset management business are ongoing, a spokeswoman for Abraaj told Bloomberg News, without providing any additional details. A representative for Colony declined to comment, while Cerberus did not immediately respond to requests for comment.

The Downfall

The collapse of Abraaj, once one of the developing world’s influential investors, came just months after it emerged that some of its investors commissioned an audit to investigate the alleged mismanagement of money in its healthcare fund. The buyout firm filed for a court-supervised restructuring last month and has been seeking to sell its fund unit and also the stakes it owns in the funds.

Colony’s agreement to acquire four Abraaj funds was due to be completed by July 1. The U.S. asset manager proposed to acquire:

  • Abraaj Africa Fund III -- $990 million in assets
  • Abraaj Latin America Fund II -- $545 million in assets
  • Abraaj Turkey Fund I -- $526 million in assets
  • Abraaj North Africa Fund II -- $375 million in assets

Read more: Dubai’s Star Investor Sees His Business Fall to Earth Read more:

A review of Abraaj’s finances found that there was commingling of the buyout firm’s own money in the health-care fund and its fourth private-equity fund, according to a summary of a report by Deloitte that was presented to creditors on June 4 and seen by Bloomberg News. Abraaj still owes $94.6 million to its so-called Private Equity Fund IV, but all the money has been accounted for and there’s no evidence of embezzlement or misappropriation, according to the report.

Abraaj founder Arif Naqvi is facing a criminal case in the United Arab Emirates for issuing a check without sufficient funds. The case against Naqvi and another Abraaj director is coming up on Wednesday after it was adjourned last week.

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