New York: Abraaj Group, one of the largest private equity investors in developing markets such as the Middle East and Latin America, has no plans to expand into North America and Europe even as firms on those continents increasingly move into emerging markets, Chief Executive Officer Arif Naqvi said.
“I’m a big believer that if you’re not No. 1, 2 or 3 in a particular marketplace then you shouldn’t be there,” Naqvi said on Tuesday in an interview at Bloomberg LP’s headquarters in New York. “More and more firms are looking at our markets. We welcome that, and we show the way.”
With $9.5 billion (Dh34 billion) under management, Dubai-based Abraaj is simultaneously broadening its offerings — adding teams dedicated to real estate, credit and alternative energy — while remaining focused on the geographies where it’s found success since Naqvi started the firm in 2002: the Middle East, Southeast and Central Asia, Africa and Latin America.
Abraaj invests when it can increase a company’s earnings at 20 per cent to 25 per cent a year. According to Naqvi, 55, growth at that level more than compensates for risks inherent to such geographies such as political instability, regulatory uncertainty, rule-of-law weaknesses and foreign-exchange volatility.
“When you’re experiencing growth of that nature, you can pretty much address most risks that you’d care to think of,” he said.
Abraaj is leading a group of investors planning to bid for a minority stake in Barclays Plc’s African unit, people with knowledge of the matter said this week. The firm, which the people said is in discussions to team up with partners including a Middle Eastern sovereign wealth fund, may bid for as much as 35 per cent of Barclays Africa Group Ltd., one of the people said.
While US leveraged-buyout and growth-equity investors such as Carlyle Group LP, TPG, Warburg Pincus and General Atlantic increasingly look to emerging markets for deals, Naqvi said he isn’t concerned that competitors will take business from Abraaj. Among the benefits: Abraaj has sold companies to Washington-based Carlyle and New York-based Warburg Pincus and General Atlantic in the past year, and it’s partnered with TPG in investments.
Abraaj, which Naqvi said “can’t do everything” in growth markets, currently sees deal opportunities in Peru, Mexico, Colombia, Chile, Egypt, Turkey, Vietnam, Indonesia and India. Some countries such as Nigeria and Brazil present challenges, he said.
“Brazil is a place where people have made an enormous amount of money, but it continues to be a place that we view with a lot of caution,” Naqvi said. “There’s a lot of bureaucracy, a lot of barriers. Because of that we’ve had a wait-and-see attitude to Brazil.”
Another thing Naqvi has a wait-and-see approach to is a potential initial public offering of shares in Abraaj, which has more than 300 employees in more than 20 offices. Seven major private equity firms in the US, including Blackstone Group LP, Carlyle and KKR & Co. are public.
“Never say never,” Naqvi said, “and never say it’s imminent.”