Dubai: Arqaam Capital, the Dubai-based regional investment bank, is targeting opportunities in sub-Saharan Africa and East Africa markets along with its business activities in Middle East and North Africa (Mena) and other emerging and frontier markets, CEO Riad Meliti told Gulf News in a recent interview.
“There are huge untapped opportunities in Africa. The story is true about most of Africa. There is huge demand for funding. But there are big funding gaps related to structural issues. This is where we think Arqaam can effectively intermediate,” Meliti said.
Typically, many African nations are faced with high money supply and high inflation. In their efforts to fight inflation, central banks keep interest rates high, which effectively created liquidity traps in these economies.
“When interest rates are high on treasury bills, banks prefer to keep money locked in these secure instruments rather than lending it out to businesses. Even if the banks lend, it will be at exorbitant rates which will not be economically viable for businesses. Our initiatives are aimed at bringing new funding sources to businesses in these countries and address the crowding out effect in Africa,” Meliti said.
Arqaam’s corporate finance business is engaged in intermediating international capital into sub-Saharan markets. Geographical proximity and easy connectivity has made Africa an attractive destination for Gulf investors.
Investments on a global scale
Meliti says his focus is beyond Gulf investors. “We are looking at channelling investments into Africa on a global scale. We have more than 700 clients globally who are looking for opportunities and we are convinced there are huge untapped opportunities in Africa which can deliver competitive returns while making funding available to projects in Africa,” he said.
In addition to financial intermediation, Arqaam has plans to offer its entire range of services in Africa, ranging from capital raising, debt funding, mergers and acquisitions and fund management. The bank’s fund management business is working on the launch of an Africa fund in the near future.
In the Mena region, despite the slowdown in investment banking activities following the global financial crisis and recent political turmoil, the bank kept expanding its activities.
“We started off our business in the Mena region. I think the businesses have begun to mature and people know who we are. Our research section is proving to be a big asset. In the summer of 2011, we had about 20 companies under coverage and now it is more than 175 companies across the region,” he said.
