Embattled Dubai Fund Abraaj Is Said to Cut About 15% of Jobs

(Bloomberg) -- Abraaj Group is cutting about 15 percent of its total workforce, according to people with knowledge of the matter, as the Middle East's largest buyout fund seeks to trim costs, placate investors and curb the tumult that followed allegations of misused funds.

Positions are being eliminated globally, mostly in back-office operations and among junior employees, with most of the affected staff being notified on Thursday, the people said, declining to be identified as the plans are confidential. No partners will be fired, they said. The company employs about 350 people.

“It is always difficult to separate talented people from the firm,” the Dubai-based buyout firm said in a statement. “The personnel changes we are making as part of this re-organization will help ensure that Abraaj is better positioned for operational effectiveness and sustainable growth.”

Paring jobs may help alleviate the pressure on the new leaders taking control of the 16-year-old firm's asset management business from founder Arif Naqvi. Abraaj, which concluded that money in its health fund hadn't been misused following an internal review, has nevertheless been forced to return capital in a new fund and halt fresh investments while it reorganizes its structure and prepares to introduce new internal controls.

Multiple Challenges

Omar Lodhi and Selcuk Yorgancioglu, appointed last month to oversee funds globally for institutional investors, face the challenge of coping with increased scrutiny from regulators and stemming an exodus of top executives. The buyout firm is also considering the sale of a stake in its fund management business, people familiar with the matter said earlier this week.

The firm is in the final stages of separating Abraaj Investment Management Ltd. from the holding company that Naqvi will run, the people said. The job cuts will save costs and allow the firm to remain profitable, they said. The company said it will disclose the results of its internal strategic review in the coming weeks.

The markets regulator for the Dubai financial center where Abraaj is licensed is holding discussions with the firm about some investors' concern that capital in a health-care fund wasn't allocated properly, though no formal investigation is underway, people familiar with the matter said earlier this week.

Mustafa Abdel-Wadood, a managing partner and global head of private equity at Abraaj, resigned late last year and his departure was disclosed to staff in a note on Sunday, the people said. He will be a non-executive member of the firm's investment committees, Abraaj's spokeswoman had said, noting that the firm has a “deep bench” of leaders. Chief Financial Officer Ashish Dave and Sev Vettivetpillai, a managing partner and global head of impact investing, are also among those leaving.

Some large global buyout funds are weighing investing in Abraaj, though deliberations are at an early stage and no decisions have been made, the people said. Meanwhile, the firm plans to start making new investments from some of its funds as early as this week, some of the people said.

--With assistance from Archana Narayanan

To contact the reporter on this story: Dinesh Nair in London at dnair5@bloomberg.net.

To contact the editors responsible for this story: Dinesh Nair at dnair5@bloomberg.net, Daniel Hauck at dhauck1@bloomberg.net, Chitra Somayaji, Elizabeth Fournier

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