Colony Capital acquires Abraaj's Latin American private equity arm

29 January 2019

The Middle East’s largest private equity firm, Abraaj Group, has sold its private equity business in Latin America to Colony Capital, a US headquartered investment management firm. The deal comes months after Colony Capital already acquired Abraaj’s fund-management businesses in Latin America, as well as in Sub-Saharan Africa, North Africa and Turkey.

Founded 16 years ago by former Arthur Andersen accountant Arif Naqvi, up until the start of 2018 Abraaj Group was one of Middle East’s most illustrious companies, having grown into the region’s most influential emerging-market investor and private equity dealmaker with assets under management of over $13 billion. The investment firm enjoyed a  large global backing – investors, family offices, foundations, sovereign wealth funds and pension funds, including the likes of the World Bank, CDC Group, Proparco Group, Philips and the Bill & Melinda Gates Foundation, the world’s private philanthropic organization. 

In the space of just six months however, the Dubai-based firm’s fortunes took a dramatic turn following allegations that money in the company’s $1 billion health fund had been misused. Reports also surfaced about Abraaj’s fraudulent financial figures. A report released by PwC months later found that the company’s main revenues hadn’t covered its operating costs for years. The firm had structurally borrowed new funds to fill the gaps, and owed creditors over $1 billion. The revelations brought Abraaj under immense pressure, and in June last year the company filed for provisional liquidation in the Cayman Islands, where the firm formally is registered.

Colony Capital acquires Abraaj's Latin American private equity arm

Since then, Abraaj Group has become one of the Middle East’s largest restructuring and bankruptcy cases in history. Several consultancies were brought in to guide the process, including two AlixPartners (which oversaw the separation of the health-fund) and Alvarez & Marsal (to recover funds) – both firms are restructuring specialists and rank among the top consulting firms for turnaround globally, including in Brazil. Meanwhile, Big Four giants Deloitte and PricewaterhouseCoopers (PwC) were appointed by the court to oversee Abraaj’s restructuring and divestments to interested buyers.

Abraaj’s Latin American private equity business

One of the deals which emerged out of Abraaj’s separation was the sale of Abraaj's key funds in Latin America, Africa and Turkey to Colony Capital, a New York headquartered investment manager with over 400 employees across 17 locations globally. Among the funds acquired by Colony Capital were the Abraaj Latin America Fund II, which has assets of $545 million, the Abraaj Turkey Fund I with $526 million, the Abraaj North Africa Fund II with assets of $375 million, and the Abraaj Africa Fund III, which has assets of $990 million. “We’re delighted to have crafted this comprehensive global solution for Abraaj and its stakeholders and sincerely hope that this can enable the process of rebuilding on all sides,” said Colony Capital’s Executive Chairman Tom Barrack in the statement. 

Now, seven months down the line, Colony Capital has made a second swoop for part of Abraaj's business – this time round the US business has acquired the firm’s private equity unit in Latin America. Since establishing in the region in 2006, Abraaj's unit has deployed over $700 million across 22 investments, and currently manages over $500 million of assets. The company focuses on growth equity investments in middle-market companies, with Mexico, Colombia, Peru and Chile the main countries targeted. “The business has established itself as a premier private equity investor across Latin America,” remarked Justin Chang, Managing Director and Global Head of Private Equity for Colony Capital.

As part of the deal, which was supported by liquidators Deloitte and PwC, Abraaj's senior management team in Latin America – Miguel Angel Olea Sisniega, Hector Martinez Fry, Gerardo Mendoza Llanes and Eduardo Cortina Murrieta – will transfer to Colony Capital and continue to lead the operations. “We are confident that our partnership with Colony Capital is the best decision for the company, our investors and for our professional growth,” said Sisniega.

Related: M&A forecasted to slow in unstable Latin America political climate.

BDO adds professional services firm in Bolivia to network

11 February 2019

Global professional services firm BDO has expanded its footprint in Latin America with the addition of a new member firm in Bolivia. 

The firm, trading as KPI Auditores y Consultores, was founded in 2010 and is managed by a team of seven partners, with managing partner Marcelo Berthin at the helm. Six of the new firm’s seven partners have a background at BDO, while the group also bring experience at tier-one accounting and consulting firms including EY, PKF and PwC to its new parent. KPI, previously affiliated with rival network Antea, which it joined in 2014, has been rebranded as BDO Bolivia. 

“BDO Bolivia’s goal is to deliver outstanding audit, financial advisory, tax, consulting, and digital services to clients,” said Berthin, who has been leading the firm since 2014, after serving a large bank, the United States Agency for International Development (USAID; a US agency that battles extreme global poverty) and EY, where he spent a decade in the firm’s audit department. While the firm works for clients across a range of sectors, its focus lies on clients in manufacturing, mining, not-for-profit, investment services and agriculture.

BDO adds professional services firm in Bolivia to network

According to Berthin, formerly KPI Auditores y Consultores will be able to benefit from BDO’s global reach – the world’s fifth largest accounting group has over 80,000 employees in 160+ countries – and the cross-border work which flows out of the network. “The recent increase in business enquiries from the UK, Germany, Panama, Chile and Brazil that we’ve received through BDO’s global organisation confirm this and points to further expansion for BDO in Bolivia.”

He added that the local teams based in La Paz (headquarter) and Santa Cruz will also be able to tap into BDO’s deep industry and functional expertise.

Commenting on the expansion in Bolivia, Albert Lopez, BDO’s Regional CEO for the Americas, said: “I am very pleased to welcome a leading firm in Bolivia to BDO. With significant experience in Bolivia, servicing national and international companies and institutions, the team have an established reputation that will launch BDO onto new paths of growth in Bolivia. The new firm’s ability to provide integrated solutions to its clients in the country will, when combined with BDO’s global reach, see business coming in from the wider Latin American region and beyond.”

Across Latin America, BDO has more than 5,100 professionals working from 63 offices in 23 countries. The firm’s largest offices are located in economic hotspots such as Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru and Uruguay. 

Late last year, professional services firm Andersen Global touched in Bolivia with the addition of Tufiño Villegas to its network. The tax and legal advisory was founded in 1995 and has offices in capital city La Paz, Santa Cruz and Cochabamba.