Abraaj Shows It Pays to Be a Noisy Investor
Abraaj Used Colors and Noise to Prioritize Payments to Investors
(Bloomberg) -- It paid to make noise as an investor in the now defunct Abraaj Group.
As the buyout firm’s financial woes grew, senior management drew up a color chart to pay limited partners according to how much “noise” they made, a report by Dubai’s financial regulator showed.
Abraaj, which once managed about $14 billion, was forced into liquidation last year after being accused of mismanaging investor funds. The firm’s backers included the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corp.
In 2016, when Abraaj faced a shortfall in one of its key funds, the company prioritized “payments in order of importance, noise makers and those that will come back, with the latest being legacy investors and passive voices.”
“I have color coded the attached; ask ………. as well ti [sic] opine on who is making noise,” according to an internal email, cited in Dubai Financial Services Authority’s report.
Click here for DFSA report
Dubai’s financial watchdog slapped Abraaj with a record $315 million fine on Tuesday for deceiving investors and misappropriating their funds. Abraaj’s liquidators in the past year have been trying to sell the company’s funds. London-based Actis LLP took over two funds this month, while Colony Capital acquired its Latin American operations earlier this year.
To contact the reporter on this story: Nicolas Parasie in Dubai at nparasie1@bloomberg.net
To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Shaji Mathew
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