After upgrading from 7.3 to 7.4 , ipa-server-upgrade command fails with the error: " exception: KeyError:getpwnam(): name not found: ipaapi "

Issue

After upgrading from 7.3 to 7.4 , ipa-server-upgrade command fails with the error: "exception: KeyError: 'getpwnam(): name not found: ipaapi'"

We see the following errors in /var/log/ipaupgrade.log

2017-08-02T13:57:52Z ERROR IPA server upgrade failed: Inspect /var/log/ipaupgrade.log and run command ipa-server-upgrade manually.
2017-08-02T13:57:52Z DEBUG   File "/usr/lib/python2.7/site-packages/ipapython/admintool.py", line 172, in execute
    return_value = self.run()
  File "/usr/lib/python2.7/site-packages/ipaserver/install/ipa_server_upgrade.py", line 46, in run
    server.upgrade()
  File "/usr/lib/python2.7/site-packages/ipaserver/install/server/upgrade.py", line 1884, in upgrade
    tasks.create_tmpfiles_dirs()
  File "/usr/lib/python2.7/site-packages/ipaplatform/redhat/tasks.py", line 528, in create_tmpfiles_dirs
    pent = pwd.getpwnam(IPAAPI_USER)

2017-08-02T13:57:52Z DEBUG The ipa-server-upgrade command failed, exception: KeyError: 'getpwnam(): name not found: ipaapi'
2017-08-02T13:57:52Z ERROR Unexpected error - see /var/log/ipaupgrade.log for details:
KeyError: 'getpwnam(): name not found: ipaapi'
2017-08-02T13:57:52Z ERROR The ipa-server-upgrade command failed. See /var/log/ipaupgrade.log for more information