Shailesh Dash believes the decline in oil prices should have a positive impact on the private equity industry. Image Credit: Courtesy: Al Masah Capital

Dubai: Al Masah Capital, the Dubai headquartered alternative asset management company specialising in private equity and alternate asset classes is expecting another round of investment boom in the region led by regional and international investors.

“As the asset prices recover there is huge demand for alternative asset classes in the region and private equity is just one of them. We have local regional and international investors who are keen on taking exposure to some of the regional asset classes,” said Shailesh Dash, Chief Executive Officer of Al Masah Capital in an interview with Gulf News.

Al Masah Capital which began its operations in 2010 has done 21 transactions so far. The company raised 11 funds, totalling half a billion dollars. A large portion of it (about $300 million) was invested in fixed income and about $200 million was invested in private equity.

Following the financial crisis, when the asset prices tanked, private equity investments took a beating, Al Masah focused on fixed income assets that eventually delivered 8.5 per cent to 9 per cent return on investment.

With the gradual recovery of private equity investing in 2011 and 2012, the company began raising new funds. Keeping with the market demand, the investments were done under corporate structure based on special purpose vehicles (SPV).

“After the sharp decline in asset prices in 2009 — 2010, the market was not ready for the traditional structure of general partners (GPs) managing the funds on behalf of limited partners (GP/LP structure). Every investor wanted to know where their money was going because people were not very comfortable with blind-pool investments,” said Dash.

Today with the private equity and alternative asset classes in demand, the company is planning a private equity fund that is going to be in the traditional GP/LP model. A $500 million private equity fund is in the works and is expected to be launched in the second half of next year. The investments will be largely focused on the Gulf region and South East Asia.

“Although the structure will be in GP/ LP model, it will not be based on a blind pool of assets. Our LPs can look at the assets and make their call,” said Dash.

Dash sees a strong revival in the demand and supply side of private equity. GCC needs private equity money. There is a general feeling that GCC is a capital surplus, but the reality the private sector needs capital for expansion. Private equity is indeed a viable source of funding and it comes with certain amount of skill sets and sophistication that will benefit the business building process. “The leadership, the business strategies and the skill sets that come along with the capital will help regional businesses to expand internationally,” he said.

Apart from its new private equity fund, Al Masah has plans to launch a real estate fund sometime early next year. The structure of this fund will be very similar to private equity investing in terms of returns and tenure. “We are an alternative investment firm, and we closely monitor the demand from the market and address it. Worldwide everyone is increasing their allocations to alternatives and emerging markets and we see a clear opportunity for GCC real estate,” said Dash.