The wrong impact

5 February 2018 By Una Galani Follow @ugalani

The billionaire’s Gates Foundation is at odds with Abraaj, a buyout group, over a $1 bln fund to provide healthcare in emerging markets. The dispute underscores the tension in combining charitable and financial goals. The fallout will only fuel skepticism of impact investing.

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Abraaj said on Feb. 4 that it has hired global auditing firm KPMG to look into the finances of its healthcare fund after a reported dispute with some of its investors.

The Wall Street Journal, citing unnamed sources, reported on Feb. 2 that four investors in a $1 billion healthcare fund managed by the private-equity firm had hired a forensic accountant to examine what happened to some of their money.

The investors wanted to know why some of their money had not yet been used for the stated purpose of building hospitals and clinics – and whether their money ever left a bank account earmarked for investor funds. The investors' joint request for bank statements was denied, the newspaper added.

The investors include the Bill & Melinda Gates Foundation, the World Bank's International Finance Corp unit, and two other investors who pledged about a quarter of the fund's money.

In a statement, Abraaj said "some capital was not used as quickly as anticipated due to unforeseen political and regulatory developments in several of the fund’s operating markets". It added that the terms of its agreement with investors allow the fund to retain called capital in situations where an investment is delayed but still not approved and not cancelled.

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