Client Story

When an emerging market's healthcare fund nears collapse

  • Abraaj Growth Markets Health Fund plunged into crisis after high-profile investors–including the Bill & Melinda Gates Foundation and the World Bank Group’s International Finance Corp (IFC)–launched a forensic investigation following allegations of misuse of fund money

  • Investors’ lack of confidence in the fund manager left the fund—serving two million low-income patients—on the brink of collapse

  • AlixPartners was initially engaged to review the fund and its underlying portfolio of assets, identify options, and make recommendations to concerned investors. Subsequently, AlixPartners was appointed as interim manager of the fund

"This was a one-of-a-kind transaction that required intense perseverance, creativity and a commitment to a larger objective, all of which AlixPartners exhibited throughout our nearly 12 months of negotiations.”
David Mosse, TPG Growth

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THE SITUATION: The Abraaj Healthcare Fund on the brink of collapse

Emerging markets specialist, the Abraaj Group, was founded in 2002 by businessman Arif Naqvi, with its headquarters in Dubai, UAE. In 2016, it launched the Abraaj Growth Markets Health Fund, aiming to build a healthcare platform under the Evercare brand and provide affordable, high-quality healthcare to low-income residents of 10 of the largest cities in Sub-Saharan Africa and South Asia.

The $1 billion fund had ownership interests in 26 hospitals, 18 clinics and 40 diagnostics centers, as well as brownfield and greenfield assets across India, Pakistan, Kenya and Nigeria. In total, the fund had 10,000 employees serving two million patients annually. Its high-profile investors included the Bill & Melinda Gates Foundation, and various government bodies and financial institutions, including Overseas Private Investment Corporation (US Government), PROPARCO (French Government), and IFC (World Bank Group).

Early in 2018, the fund was plunged into crisis when investors appointed forensic auditors to investigate concerns about the potential allegations of the misuse of funds by the Abraaj Group senior management and its founder. With a knock-on effect of reputational damage to the broader Abraaj Group, and following defaults on a number of loans, creditors filed a petition to appoint Provisional Liquidators to certain Abraaj group companies and the manager of the fund.

THE APPROACH: A holistic review of Abraaj to identify investor options

AlixPartners was initially engaged to perform a QuickStrike® review of the fund, assessing its governance and control structure, financial and operational performance, basis of valuation, cashflow position, and funding requirements. AlixPartners’ experts in healthcare, private equity and cash management performed the QuickStrike®, which included deploying staff to operational and management sites in Dubai, Kenya, India, Pakistan and Nigeria during an intense short review period.

Following the review, and endorsed by the Limited Partner Advisory Committee, AlixPartners developed a stabilization strategy designed to protect the value and viability of the fund, activating a team to oversee the finance function and senior management team, as well as implementing a new governance and control structure. The fund selected AlixPartners as interim manager in July 2018 as a result of an innovative Cayman Court-sanctioned protocol agreement between AlixPartners, the Abraaj Provisional Liquidator and the Abraaj management entity.

Following an initial period of stabilization, we assisted the fund management and investors to identify a replacement General Partner for the fund. AlixPartners managed a highly complex and detailed due diligence process, the agreement of a new fund corporate structure, and extensive commercial negotiations.

THE SOLUTION: Stabilization and transition to a new permanent manager

By performing a rapid and thorough assessment of the fund’s position in this "when it really matters" situation, AlixPartners stabilized the fund and introduced new governance and controls to provide confidence to its investors following an extended period of uncertainty.

In June 2019, we successfully transitioned the management of the fund to TPG Growth, which became the permanent replacement manager. TPG’s growth equity investment platform manages The Rise Fund, a global impact investing fund.

This process has enabled the fund to continue its critical work of providing affordable high-quality healthcare, and improving the health and well-being of millions of lower-income patients.

THE SITUATION

The Abraaj Healthcare Fund on the brink of collapse

Emerging markets specialist, the Abraaj Group, was founded in 2002 by businessman Arif Naqvi, with its headquarters in Dubai, UAE. In 2016, it launched the Abraaj Growth Markets Health Fund, aiming to build a healthcare platform under the Evercare brand and provide affordable, high-quality healthcare to low-income residents of 10 of the largest cities in Sub-Saharan Africa and South Asia.

The $1 billion fund had ownership interests in 26 hospitals, 18 clinics and 40 diagnostics centers, as well as brownfield and greenfield assets across India, Pakistan, Kenya and Nigeria.  In total, the fund had 10,000 employees serving two million patients annually. Its high-profile investors included the Bill & Melinda Gates Foundation, and various government bodies and financial institutions, including Overseas Private Investment Corporation (US Government), PROPARCO (French Government), and IFC (World Bank Group).

Early in 2018, the fund was plunged into crisis when investors appointed forensic auditors to investigate concerns about the potential allegations of the misuse of funds by the Abraaj Group senior management and its founder. With a knock-on effect of reputational damage to the broader Abraaj Group, and following defaults on a number of loans, creditors filed a petition to appoint Provisional Liquidators to certain Abraaj group companies and the manager of the fund.

 

THE APPROACH

A holistic review of Abraaj to identify investor options

AlixPartners was initially engaged to perform a QuickStrike®review of the fund, assessing its governance and control structure, financial and operational performance, basis of valuation, cashflow position, and funding requirements.

AlixPartners’ experts in healthcare, private equity and cash management performed the QuickStrike®, which included the deployment of staff to operational and management sites in Dubai, Kenya, India, Pakistan and Nigeria during an intense short review period.

Following the review, and endorsed by the Limited Partner Advisory Committee, AlixPartners developed a stabilization strategy designed to protect the value and viability of the fund. This included activating a team to oversee the finance function and senior management team, as well as implement a new governance and control structure.

AlixPartners served as interim manager of the fund in July 2018 as a result of an innovative Cayman Court-sanctioned protocol agreement between AlixPartners, the Abraaj Provisional Liquidator and the Abraaj Management entity.

Following an initial period of stabilization, we  assisted the investors and fund management to identify a replacement General Partner. This involved AlixPartners managing a highly complex and detailed due diligence process, the agreement of a new fund corporate structure, and extensive commercial negotiations.

THE OUTCOME

Stabilization and transition to a new permanent manager

By performing a rapid and thorough assessment of the fund’s position, when it really mattered, AlixPartners was able to stabilize the fund and introduce new governance and controls to provide confidence to its investors following an extended period of uncertainty.

In June 2019, AlixPartners successfully transitioned the management of the fund to TPG Growth, which became the permanent replacement manager.  TPG’s growth equity investment platform manages The Rise Fund, a global impact investing fund.

This process has enabled the fund to continue its critical work of providing affordable high-quality healthcare – thus improving the health and well being of millions of lower-income patients.

When it really matters: 10,000 jobs and 2 million patients protected

This case demonstrates the value that can be generated from a swift assessment, and a focus on stabilization vs. disruptive transitions. 

The AlixPartners approach protected 10,000 jobs and avoided disruption to more than two million patients, keeping the Abraaj Healthcare system operating safely during the entire restructuring procedure.

 

 

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WHEN IT REALLY MATTERS: 10,000 JOBS and 2M+ Patients PROTECTED

This case demonstrates the value that can be generated from a swift assessment, and a focus on stabilization vs. disruptive transitions.

The AlixPartners approach protected 10,000 jobs and avoided disruption to more than two million patients, keeping the Abraaj Healthcare system operating safely during the entire restructuring procedure.

This case demonstrates the value that can be generated from a swift assessment, and a focus on stabilization vs. disruptive transitions.

The AlixPartners approach protected 10,000 jobs and avoided disruption to more than two million patients, keeping the Abraaj Healthcare system operating safely during the entire restructuring procedure.