Abraaj Group on the spot over use of investor funds

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The independently run health care fund of Dubai-based private equity fund Abraaj Group is in the spotlight over its claims of irregular use of funds in three African countries.

Media reports in the Wall Street Journal and New York Times over the weekend cited concerns from investors that the fund’s money set aside for investments in the three countries had been misused.

Abraaj’s Kenyan portfolio is made up of 18 clinics and 10 hospitals that provide over 700 patient beds.

The $1 billion (about Sh103 billion) Abraaj Growth Markets Health Fund (AGHF), is focused on Africa, India, and Pakistan, and has been snapping up Kenyan hospital chains firming its grip in the sector.

The fund had announced plans last year to add more Kenyan hospital chains in its portfolio.

In a quick rejoinder, however, Abraaj dismissed the media reports as “inaccurate and misleading” saying that all the capital had been drawn and deployed correctly for fund investments.

“Some capital was not used as quickly as anticipated due to unforeseen political and regulatory developments in several of the fund’s operating markets,” it said in a statement.
Abraaj has brought in accounting firm KPMG to examine what happened to some of the capital.

It said, “delays in use of funds” had been communicated to its investors but that it would use KPMG to “verify all receipts and payments made by the fund” according to a report by Financial Times of London.

The fund said it had hit “roadblocks” in investments in Kenya, Nigeria, and Pakistan, with the delays communicated to investors, said FT in its report. “We are confident that the exercise being conducted by KPMG will confirm that all the funds were accounted for and used appropriately,” it said in the statement.

And in response to Business Daily queries the fund said Monday it is still committed to investing in Kenya.

“The Abraaj Group has made significant investments in Kenya and it remains central to our intention to provide affordable, accessible and quality care to low and middle-income communities. We remain focused on implementing the value creation plans for the investments we have already made and looking ahead to exploring additional opportunities as they emerge.”

Fredd Kambo, a director in the healthcare team at the Abraaj Group with responsibility for East Africa, had in an earlier interview said the PE firm plans to invest in Kenyan’s underserved healthcare sector.

“Essentially, AGHF is on a mission to provide affordable, accessible, and high-quality health care to middle and low-income patients in the region,” said Mr. Kambo in September last year.

“As an example, the provision of hospital beds per 10,000 people stands at 14 in Kenya versus a global average of 27. We, therefore, are embarking on a journey to partner with local healthcare operators to provide them with capital and expertise to address the urgent need.” Mr. Kambo had said.

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