Abraaj Group, the Middile East’s biggest private equity firm, is facing the biggest crisis in its history, with a number of major management changes and top-level resignations.
According to reports, chief financial officer Ashish Dave has left the company and two other other senior executives are also preparing to leave. The investment firm, which manages $13.6 billion in assets, is also considering a round of job cuts, reports said.
Abraaj has shaken up its management, suspended new investments and undertaken a review of its corporate structure following a dispute with four of its investors over the use of their money in a $1 billion healthcare fund. The investors include the Bill & Melinda Gates Foundation and the World Bank’s IFC arm.
Abraaj has always denied reports that it misused the money but the scandal at the Middle East’s largest private equity firm is seen to have taken the shine off a fast-growing sector in the region.
CEO Arif Naqvi, who founded the firm in 2002 and turned it into a major emerging market investor, stepped aside from running the fund, Abraaj Investment Management Ltd, in February.
The company issued a statement last month announcing broad changes to the firm’s governance and operating model and the appointment of a new leadership team.
Core to the re-organization will be the separation of AIML and Abraaj Holdings , which will be independently managed. The fund management business will continue to oversee the operations of all of Abraaj’s funds globally on behalf of leading institutional investors and manage a portfolio of investee businesses across Asia, Africa, Middle East, Turkey and Latin America.
Arif Naqvi has passed the reins of the fund management entity to the Co-Chief Executives in order to further grow the business. The executive leadership team at AIML will be led by Omar Lodhi and Selcuk Yorgancioglu as Co-Chief Executive Officers. Mr. Naqvi will focus on managing Abraaj Holdings and will retain a non-executive role as a member of the Global Investment Committee of AIML.
Omar Lodhi and Selcuk Yorgancioglu will assume their roles with immediate effect. Mr. Lodhi and Mr. Yorgancioglu have each been with the Group for over 10 years and were respectively Partners for the Group’s Asia and Turkey businesses.
In their new positions, they will be responsible for the overall strategy of the fund management business but will each have different areas of responsibility. They will work closely with the board of AIML to drive the necessary operational and governance changes to ensure that the firm continues to perform at the highest levels.
AIML has commissioned a comprehensive review of its corporate structure with areas of focus to include governance and control functions. Independent specialist consultants have been retained to carry out this review. 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. Going forward, AIML will have an independent board of directors to which internal audit and compliance will directly report.
Mustafa Abdel-Wadood, Wahid Hamid and Sev Vettivetpillai will continue their full time role as members of the Global Investment Committee and as Managing Partners of AIML with oversight responsibility on the Executive Committee of AIML to ensure an orderly implementation of the new management structure and governance systems.
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. This has in no way slowed Abraaj’s momentum in deal sourcing and transaction negotiations that are performed by investment teams across its markets.