Abu Dhabi fund loses bid to stop buyout firm’s asset shuffling

Abu Dhabi fund loses bid to stop buyout firm’s asset shuffling

Abu Dhabi Investment Council (ADIC), a sovereign wealth fund, has temporarily failed in its attempt to block a $800 million continuation fund managed by Houston-based private equity firm Energy & Minerals Group (EMG). The dispute centers on EMG's plan to transfer its stake in natural gas producer Ascent Resources LLC to a newly created fund, a move ADIC alleges involves conflicts of interest and fiduciary breaches. ADIC filed suit in Delaware's Chancery Court in November 2025, seeking to halt the transaction, which would allow existing investors to exit or reinvest while EMG retains control of the asset according to court filings.

The lawsuit claims EMG undervalued Ascent Resources, omitted material information, and imposed new fees on rollover investors without offering existing terms, potentially reallocating value to the firm as legal analysis indicates. EMG, which manages $12 billion and has backed Ascent for over a decade, has not commented on the allegations according to Bloomberg reports.

While ADIC sought a preliminary injunction to block the deal, the parties agreed to pause the transaction pending arbitration under their partnership agreements as reported. This outcome reflects growing scrutiny of continuation vehicles (CVs), which accounted for 19% of private equity asset sales in early 2025—a 60% increase from 2024—amid investor concerns over transparency and governance according to industry analysis.

The case highlights tensions in private equity as firms increasingly use CVs to extend holdings amid limited exit options. Legal experts emphasize that sponsors must prioritize equitable processes, including parity in information disclosure and robust investor engagement, to mitigate fiduciary risks as legal experts have noted. The arbitration outcome could influence future CV structures and investor expectations in the sector.