This is the second part of a two-part series on how Abraaj and other recent scandals could transform governance in private equity. Late last year, Bain Capital- and KKR-backed Toys 'R' Us announced it was filing for bankruptcy. The Bill & Melinda Gates Foundation, an investor in the Dubai-based firm's Markets Health Fund, claimed the emerging markets giant Abraaj had misappropriated capital committed to the vehicle.Allegations of Abraaj's misuse of funds were always likely to trigger LP unease. However, for investors, concerns are growing over the implications of a leverage model that is a central, yet controversial element of the private equity industry. "It's a growing trend," acknowledges Christophe Bavière, CEO of European private equity firm Idinvest. "As private equity matures as an asset class and grows its market share, LPs increasingly voice their opinion and they are legitimate in raising these requests. You cannot escape some sort of responsibility."
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