Arif Naqvi, founder and chief executive at Abraaj Holdings has reportedly been arrested in the UK, and is awaiting possible extradition to the US – where he was accused of misappropriating at least $230 million.
According to Bloomberg, Abraaj ex managing partner and global head of private equity Mustafa Abdel-Wadood has also been arrested in the US. Abdel-Wadood left Abraaj in 2018, but was understood to have resigned in late 2017.
The duo has reportedly been arrested on charges of defrauding investors.
In the US, the Securities and Exchange Commission (SEC) has charged Naqvi and Abraaj Investment Management Limited (AIML), with misappropriating funds from US investors.
The SEC alleges that Naqvi and AIML misused LP capital linked to Abraaj Growth Markets Health Fund (AGHF), closed at $1 billion in 2016.
According to SEC, Naqvi misappropriated over $230 million between September 2016 and June 2018. He also stands accused of commingling the assets with corporate funds of AIML and its parent company, Abraaj Holdings.
SEC’s complaint has been filed in the federal district court in Manhattan. SEC charges Naqvi and AIML with violating the antifraud provisions of Sections 206(1), 206(2) and 204 of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.
The regulator is seeking permanent injunctions, disgorgement plus interest, and penalties.
AIML was created to manage the Abraaj funds in 2018, following the firm’s restructuring brought on by allegations of misuse of LP capital linked to the AGHF vehicle.
This included wider firm restructuring which also saw Naqvi moved from being CEO of the funds management business to being head of Abraaj Holdings.
Abraaj made a decision to reorganise its business after LPs such as The Gates Foundation and the International Finance Cooperation raised concerns over misuse of capital in the health fund.
Following this, Abraaj was placed under liquidation in the Cayman Islands and United Arab Emirates. Abraaj had filed for voluntary liquidation in a bid to meet debt demands in an orderly manner.
The GPs assets then went under the hammer, with the Africa platform going to Actis – following a failed Colony Capital deal.
At the end of 2018, Actis received clearance to acquire 16 Abraaj funds covering Africa and Asia. This included sub vehicles, and legacy funds inherited when Abraaj took over Aureos in Sub-Saharan Africa and the Amundi platform in North Africa.
AGHF, the vehicle over which SEC is raising concerns, was not named in the Actis acquisition.