Abraaj's Africa Fund Investors Are Seeking New Manager

(Bloomberg) -- A group of investors in Abraaj Group’s near-$1 billion sub-Saharan Africa fund are seeking a new manager, potentially complicating a broader sale process for the embattled firm’s asset management unit, according to people familiar with the matter.

Investors in the $990 million Abraaj Africa Fund III want to replace the Dubai-based company and have reached out to potential investors including Carlyle Group LP and London-based private equity investor Actis LLP, the people said, asking not to be identified as the matter is private. Deliberations are at an early stage and it’s unclear whether any of the buyout firms are interested, the people said.

Representatives for Abraaj, Carlyle and Actis declined to comment.

A move to replace Abraaj at the key emerging market fund could be a hurdle to efforts to sell the asset management business and raise liquidity at the firm. Abraaj filed for a court-supervised restructuring last month after investors commissioned an audit to look into alleged mismanagement of money in its health-care fund.

Cerberus Bid

The companies managing the restructuring had been weighing bids from Cerberus Capital Management LP and Colony Capital Inc., people familiar with the matter have said. The liquidators prefer a lower offer from Cerberus and Colony’s offer for the fund management platform was turned down, people familiar with the matter said on Sunday.

Various options are being reviewed to ensure the long-term stability of the group and the joint provisional liquidators are committed to ensuring that a positive outcome is reached for creditors, investors and wider stakeholders, according to Sunday’s emailed statement from Deloitte.

Abraaj had an “unusual” business model reliant on short-term borrowing, and key financial statements are missing or nonexistent, according to a report by PricewaterhouseCoopers seen by Bloomberg News last week. The company owes lenders $1.1 billion after the delayed sale of K-Electric in Pakistan led it to tap its health-care fund without investor consent, according to the report.

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