Dubai-based buyout firm Abraaj Group has reached an agreement to sell the group’s Latin America, Sub Saharan Africa, North Africa and Turkey Funds and the underlying Limited Partnership (LP) interests to US investment management firm Colony Capital.

The agreement has received in-principle regulatory approval and is expected to close upon a go-ahead from the Grand Court of the Cayman Islands as well as other customary consents, an announcement said on Thursday. The transaction, which is a part of the restructuring and provisional liquidation, is expected to complete by July 1.

The financial terms of the deal were not disclosed by the firms.

“Colony has also agreed to oversee, on an interim basis, other Group Funds that are not being acquired so that the Group and all its stakeholders have a comprehensive global solution in place,” said a statement from Abraaj, which has been roiled in allegations over misused funds since early this year.

The announcement of sale follows an order from Cayman Islands court appointing Deloitte as liquidators of Abraaj Investment Management Limited and PwC as provisional administrators of Abraaj Holdings. “The next step is to seek sanction of the Cayman Islands Court for the transaction, which will be undertaken on an expedited basis,” according to Stuart Sybersma, Partner at Deloitte and Joint Provisional Liquidator of Abraaj Investment Management Limited.

Colony is a global investment management firm with significant holdings in the healthcare, industrial and hospitality sectors, in addition to other private equity and debt investments, with an embedded institutional and retail investment management business. It was founded by Thomas J. Barrack, Jr. in 1991.

“We are 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 and also bring an end to the speculation that has swirled around Abraaj over the last months,” said Tom Barrack, Executive Chairman, Colony Capital, Inc.

Founded in 2002 by Arif Naqvi, Abraaj emerged to become a leading private equity investor in growth markets with a regional footprint spanning Latin America to Southeast Asia. The Middle Eastern buyout firm has investments covering diverse sectors including financial services, FMCG, industrials, healthcare, education, manufacturing and logistics.

The restructuring and liquidation is a result of a process which started after the review of Abraaj’s finances which found commingling of Abraaj’s own money in the $1 billion health-care fund and its fourth private equity fund, based on a report by Deloitte that was presented to creditors, according to a Bloomberg article.  The Deloitte report found that although Abraaj owed $94.6 million to its Private Equity Fund IV,  all the money had been accounted for and there was no evidence of embezzlement or misappropriation, the article had added.

Early this year, after a dispute ensued with investors including the Bill & Melinda Gates Foundation and International Finance Corporation over the use of their money in the healthcare fund, the group split its investment management business and holding company and investment activities were stalled. Nevertheless, the group has denied the misuse of funds.

Announcing the news of sale on Thursday, founder Arif Naqvi, who ceded control of Abraaj’s fund-management business in February, said, “The appointment of the joint provisional liquidators and the start of the process of restructuring this business that we operated across diverse markets is a moment of introspection, but also one of satisfaction, knowing that the teams that have been nurtured over the years and the businesses that we were proud to invest in now have a clearly defined future and a good home that will become the custodians of the next phase of this journey.”

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