Colony Capital’s Abraaj deal meets investor pushback

A proposed deal from US investment manager Colony Capital to buy part of the fund management business of troubled Dubai-based private equity firm Abraaj Capital is reportedly in doubt after meeting resistance from investors.

Colony announced a deal last month to acquire four emerging market funds run by Abraaj for approximately $250 million. Colony also planned to take on staff in eight offices and assume interim supervision of other Abraaj funds.

However, the deal is still subject to the approval of both a Cayman Islands court and the fund’s limited partners, some of which are concerned about the tight time frame for closing the deal, according to sources cited by Reuters. Colony is seeking further information from Abraaj that has yet to be provided.

A dispute between Abraaj, the largest buyout firm in the Middle East region, and some of its investors over its running of a $1 billion healthcare fund has caused Abraaj a succession of problems culminating in its filing for provisional liquidation in the Cayman Islands.

A statement from Abraaj’s joint provisional liquidators, Deloitte and PwC, said commercial discussions around a sale continue and “any speculation to the contrary is without basis”.

Meanwhile a court case against Abraaj founder Arif Naqvi over a bounced $48.2 million cheque has been adjourned by a Sharjah court judge until later in July. In the UAE, issuing a cheque with insufficient funds is a criminal offence that carries a maximum penalty of three years in jail.

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