June 28, 2018 / 7:30 AM / in 4 months

Colony's Cayman court showdown on Abraaj set for July 11: sources

NEW YORK/DUBAI (Reuters) - A Cayman Islands court will decide on July 11 whether to approve Colony Capital’s deal to take control of four funds belonging to Middle East private equity firm Abraaj Group, three sources familiar with the matter said.

FILE PHOTO: Arif Naqvi, Founder and Group Chief Executive of Abraaj Group attends the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 17, 2017. REUTERS/Ruben Sprich/File Photo

Abraaj, which denies any wrongdoing, has been thrown into turmoil by a dispute with four investors, including the Bill & Melinda Gates Foundation and International Finance Corp (IFC), over the use of their money in a $1 billion healthcare fund.

The row has shaken confidence in Abraaj, halted its fund raising and sparked debt repayment problems, forcing it to file for provisional liquidation in the Cayman Islands.

Colony needs approval from the investors, known as limited partners (LPs), in the four Abraaj funds for its deal to close.

The U.S.-based investment management firm expects to hold a vote ahead of the court hearing, one source with direct knowledge of the matter said.

Dubai-based Abraaj did not immediately respond to a request for comment. A spokesman for Colony declined to comment.

The source said Colony has expressed confidence it will gain the necessary LP support, though some fund investors have voiced concerns about the tight timeframe for closing the deal, which was only announced last week.

Colony is in discussions with the LPs and is saying that the timeframe is driven by the court date set in the Cayman Islands, where the fund entities are domiciled.

It is also making the case that a quick close is preferable as it distances these funds from any further reputational risk, the source said.

United Arab Emirates authorities have issued arrest warrants for the founder of Abraaj and another executive for issuing a check without sufficient funds, Reuters reported on Tuesday.

Reporting by Joshua Franklin in New York and Tom Arnold and Davide Barbuscia in Dubai; Editing by Ghaida Ghantous and Alexander Smith

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