US private equity group TPG has signed a deal to take over and manage Abraaj’s $1 billion (about Sh101 billion) healthcare fund offering relief for the Kenyan medical outlets where the fund had pumped in billions of shillings.
TPG Growth, the group’s mid-market buyout arm, said it would take over the existing assets of Abraaj’s Growth Markets Health Fund, renaming it The Evercare Health Fund. Financial terms of the deal were not disclosed.
Abraaj’s health fund Kenyan portfolio is made up of 18 clinics and 10 hospitals that provide over 700 patient beds. The fund has invested in Nairobi Women’s Hospital, Avenue Hospital, Metropolitan Hospital, and Ladnan Hospital.
The American firm said, TPG’s Rise Fund, a global impact investing fund, will co-invest in existing and new healthcare assets with other partners, including the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corporation (IFC).
“There is an undeniable need to bring better quality, lower cost healthcare options to emerging markets,” said Jim Coulter, co-chief executive of TPG, an asset manager with $104 billion (about Sh10.5 trillion) under management.
Abraaj, once the Middle East and North Africa’s largest buyout fund, had a row with investors including the Bill & Melinda Gates Foundation and the IFC over the use of money in the Sh101 billion healthcare fund.
This led to months of financial turmoil at the Dubai-based firm which filed for provisional liquidation last year.
The definitive management agreement, which has yet to close, comes as fraud cases mount against senior figures in the Abraaj scandal including founder Arif Naqvi, who in April was arrested in London and has been released on bail ahead of US extradition hearings.
The arrest of Abraaj executives on fraud charges had heightened uncertainty among Kenyan firms where it pumped billions before collapse.
US prosecutors have accused Mr Naqvi and other senior executives of duping investors by lying about Abraaj’s financial health and siphoning off funds for their personal benefit.
Mr Naqvi and former colleagues have denied the charges. “Mr Naqvi maintains his innocence, and he fully expects to be cleared of any charges,” his representatives said.
The advisory committee for the healthcare fund’s investors welcomed TPG’s appointment, saying in a statement that they remained committed to the fund’s mission.
More than half of the fund has already been invested in hospitals and clinics across Africa and south Asia.
The healthcare fund, which has been managed on an interim basis by AlixPartners, the restructuring advisers, was at the heart of events that triggered the collapse of Abraaj.
The company was a leading emerging markets investment house with more than $13 billion claimed to be under management.