Business | Banking

Middle East set to remain top pick for fund managers

The Middle East will remain a key source of capital for international fund managers, although they will need to become more attuned to the essentials of doing business here.

  • By Rachna Uppal, Staff Reporter
  • Published: 23:05 March 11, 2009
  • Gulf News

Dubai: The Middle East will remain a key source of capital for international fund managers, although they will need to become more attuned to the essentials of doing business here.

This conclusion was reached during a session of the Private Equity International Middle East Forum which brought together participants in the private equity industry from fund managers to investors to legal advisers.

In the current scenario, cash strapped investors are struggling to meet capital commitments, and fundraising is expected to dramatically slow this year.

At the same time, in the long term, sovereign wealth funds (SWF) and family offices will remain relatively unconstrained, according to Max von Bismarck, director of the World Economic Forum.

It is estimated that $3.2 trillion (Dh11.7 trillion) in sovereign wealth fund assets are currently under management, with the majority from the Middle East.

There is increasing anxiety among international fund managers about the growing pressure on sovereign wealth funds to focus on regional investment.

"For sovereign wealth funds, it is the least risky proposition to invest regionally," said Andrew Lewis, partner at law firm Norton Lewis in Dubai.

However, such pressure is considered confined mainly to SWFs with other investors regarded as lucrative partners.

A spot survey of participants showed that 47 per cent thought Middle East and North African (Mena) investors are still willing to consider investing in a non-Mena focused fund.

According to Antoine Dréan - chief executive of Triago, a private equity advisory firm - regional investors will be more selective than before.

"About half of these investors are on pause, waiting for some stabilisation before they're back in the market - as everywhere else. Fund raising is therefore a bit tougher but OK for those who know where to go," she said.

Experts agreed that the importance of building relationships for the long term would be key to tapping into opportunities to raise capital, with longer fundraising periods and increased due diligence.

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