Emerging markets-focused private equity (PE) firm Abraaj Capital, which has been consistently sealing one deal annually in India and last year formed a country-specific renewable energy investment platform, on Friday said it has paused fresh deployment as it announced changes to the firm’s governance, operating model and leadership team.
In an email response, a spokesperson for Abraaj told VCCircle, "We expect the review to last a few weeks following which the deployment can resume. Please note that the pause is only for investments where final commitments have not already been made."
As part of the reorganisation process, the Dubai-headquartered firm has spun off its fund management business, Abraaj Investment Management Ltd (AIML), into a separate entity. Other businesses have been retained under Abraaj Holdings.
“Given the breadth of structural and management changes and ongoing review, Abraaj has decided to pause its deployment activities temporarily, other than on transactions for which commitments are already final, until the re-organization is complete,” the firm said in a statement on Friday.
"This has in no way slowed Abraaj’s momentum in deal sourcing and transaction negotiations that are performed by investment teams across its markets," it added.
The firm said that its founder Arif Naqvi has handed over the reins of its fund management business to new co-chief executives Omar Lodhi and Selcuk Yorgancioglu.
Naqvi will limit himself to managing Abraaj Holdings while AIML will be run by the newly-appointed co-CEOs.
AIML has also commissioned a review of its corporate structure which will on focus governance and control functions.
“Independent specialist consultants have been retained to carry out this review,” the company said. "The intended impact of the review, which has the full support of the Abraaj board and management, is to pave the way for future and sustainable growth of the firm by driving enhanced operational effectiveness."
The development comes less than a month following media reports that four of Abraaj Capital’s limited partners had sought an independent forensic review of the firm over the alleged mismanagement of its billon-dollar Abraaj Growth Markets Healthcare Fund.
At that juncture, Abraaj said it had hired KPMG as a consultant to undertake a review on its behalf.
Abraaj Capital’s largest investment in India to date is in Hyderabad-based Quality Care Pvt. Ltd, which runs CARE Hospitals, where it had acquired Advent International’s stake for Rs 1,300 crore in 2016.
In India, Abraaj Capital inherited a few portfolio companies after it acquired Aureos Capital to strengthen its emerging markets business in 2012.
Out of this, it is planning to exit its stake in Continental Warehousing via an initial public offering.
The firm had also partnered with the Aditya Birla Group last September to set up a wind power platform.