Private equity deals set to soar

Dubai: The Middle East's private equity industry's investment opportunities are expected to exceed $670 billion in the next ten years, according to industry leaders.

Key economic sectors such as power, water healthcare, education, transportation and petrochemicals are expected to drive the growth in the sector during the next decade.

"Favourable economic environment and long term growth initiatives undertaken by regional governments have been primary growth drivers of the private industry in the region," said Arif Naqvi, vice-chairman and group chief executive officer, Abraaj Capital.

EFG-Hermes Holding, Egypt's largest publicly traded investment bank, said last week that it plans to quadruple the value of its private equity funds to $4 billion in four years as it expands in the Middle East outside of North Africa.

Dubai International Capital, the private equity arm of Dubai Holding which has more than $13 billion assets under management, is considering substantial increase in its exposure to Middle East, Africa and India.

DIC aims to increase the value of assets it manages in India, China and Japan to $5 billion within two to three years, and in the Middle East and North Africa to a similar amount from the current $1.5 billion.

Opening up

"Private family businesses are becoming more open to private equity participation and international private equity firms and professionals are seeing the region as an important destination. We see huge opportunities in the horizon," said Sameer Al Ansari, executive chairman and chief executive of Dubai International Capital.

Private equity funds are booming in the Gulf as oil prices have reached record highs. The Middle East and North Africa will become the "fourth centre" of global private equity after the US, Europe and Asia, Carlyle Group co-founder David Rubenstein said in March.

According to the latest figures from Abraaj Capital, private equity firms raised a cumulative $22.8 billion from 2002 to 2007 with six firms accounting for 50 per cent of the fund-raising activity. Leading private equity players in the region believe that the international credit crunch would not affect the regional firms or deals.

"Huge infrastructure developments underway in the region, privatisation of government-owned companies and expansion and fund-raising by family-owned businesses will drive the private equity growth," said Shailesh Dash, senior vice-president and head of strategic investment group at Kuwait-based Global Investment House.

Outlook: Potential sectors

Source: Abraaj Capital