The Dubai government and DB Capital Partners, part of Germany's Deutsche Bank, have shared Dh182 million to set up the Estithmaar Ventures fund, which will seek investment opportunities in technology, media and telecoms.

The fund will be registered in the Dubai Media City. The promoters hope to attract more institutional investors in the near term and have set a $5 million minimum for interested parties. For individual investors, the minimum is $1 million.

The eventual fund size is expected to total Dh365 million.

Dubai government's interests in the fund are routed through the Investment Office LLC.
The promoters said some of the investments brought back into the region recently will be "recycled" into the fund.

There will be a management fee of 2.5 per cent of the limited partners' aggregate commitments until 80 per cent of these have been invested, and 1.75 per cent thereafter of the total capital contributed.

The carried interest is set at 20 per cent of portfolio returns after a 6 per cent preferred return is achieved for limited partners.

The primary promoters have set a 10-year time frame for the fund, which will invest in those firms in their relatively "mid or late stage" development.

The coverage area is the Middle East, North Africa, Europe, the U.S. and the Subcontinent. As per the terms, half of the fund's investment opportunities will be sourced from the Middle East.

"The target of the fund is to invest in 10 to 15 investments over the next three to five years, and will target the top quartile of similar funds globally," said Mohammed Al Gergawi, chairman of Dubai Development and Investment Authority.

According to fund officials, 16 entities cutting across several geographical areas have been initially identified for possible investments. Some of the regional telecoms preparing for ambitious initial public offerings also look interesting, they added.

"Our shareholding in a portfolio company could even go up to a controlling stake," said Dr. Shary Ahy, chief executive of Estithmaar Ventures. "While the minimum investment in a company is $5 million, we could put in more for larger projects with the consent of the promoters.

"There are a lot of good companies out there with prospects, but are starved of cash. We can fill that breach. We have already spent a good deal of time in refining our processes."

The investment period is five years from the initial closing date.

DB Capital Partners oversees a portfolio of six billion euros in direct equity investments in companies. It has also channelled 4 billion euros to over 275 private equity funds since 1984.

Jeffery Culpepper, vice-chairman of global corporate finance, Deutsche Bank, said: "With this fund, one can expect to create a type of market excellence that Dubai has been able create in other industries."