Dubai: Despite falling oil prices, wealthy GCC investors’ appetite for global investments strategies has increased after a difficult 2013 and 2014, head of advisory firm Greenstone Equity Partners said.
Greenstone Equity Partners, which started operations in 2010, represents global fund managers and raises capital and builds new businesses in the GCC.
Just in a month, the firm has raised $52 million (Dh190.8 million) from wealthy individuals and family owned businesses in the region, on behalf of New York- and Zurich-based fund managers, and hopes to deploy more than $500 million by the end of March.
This compares to an investment of $700 million last year, when the accelerated flows came in the last 3-4 months of 2014.
“Over the past 1-2 years all the businesses have been generating good cash flows and that has been building and the decision makers have spent enough time on the sidelines looking at the cash positions, and they now think that this needs to be put to work. We are seeing a shift for appetite somewhere 3-4 months ago when we saw an acceleration in investor appetite,” Omar Al Gharabally, managing director and Partner at Greenstone Equity Partners told Gulf News from his office overlooking Burj Khalifa, the world’s tallest tower.
Greenstone Equity Partners raise capital for Capital Dynamics, which manages $19 billion from Switzerland, Abott Capital, which manages about $9 billion, Eos Capital Partners, which manages about $2 billion, from the GCC region.
Global fund managers have adjusted their individual investment strategies, by taking less risk and more stable returns. “Fund managers have adjusted their proposition to investors. Investors in the GCC understand the need for diversification. So you put those two things together in a more favourable economic environment that we are in right now,” said Al Gharabally.
“Not everybody’s business is co-related to oil and businesses have a very pragmatic view in the energy space. We have always seen that volatility,” he said.
Al Gharabally expects a recovery in crude oil prices going ahead. “Within 3-4 months we should see crude oil prices stabilising between $40-50 per barrel and recover to $60-70 in the next 6-8 months. I think it would take a lot of time before it reaches $100 per barrel,” he said.
“The family offices are not co-related to oil and they run different businesses like medical services, health care, education and all these things continue to grow in the GCC,” Al Gharabally added.
Companies are more selective in putting their capital to work, and may put in only a small investments in the early stages and tend to increase the capital depending on the returns, he said.
“People were driven more by emotional investment in the past few years. They have a greater understanding of global economies and markets,” Al Gharabally said.
Projects in pipeline
“We are looking at $400 million under discussion for investments for deployment in US infrastructure. We have a $100 million under discussion for European private equity and we also have a $50 million for US venture capital,” he said.
The company also has $90 million under review for a silicon metal plant along with a $20 million for an education project.
“The terms sheet have been issued and we envision closing those investments before the end of March,” said Al Gharabally.
The company also help to raise funds for green and brown field projects with focus on areas such as reduction in dependence on oil and gas, reduction in imports of goods and services and employment of nationals.
The firm has been working on a silicon project, which will feed silicon metal in an aluminium smelter, making it the first silicon metal facility in the UAE that would feed in across all aluminium smelters in the GCC. About 9 per cent of the global demand from an aluminium standpoint is produced in the GCC. Currently all of the silicon metal is imported from China.
Through its investors, Greenstone Equity Partners plans to raise $90 million of equity and $126 million of debt through various investors.
Greenstone has been talking to government entities in Oman, Saudi Arabia, Kuwait and private groups to help raise the money.
“We have come to a flagship position in our business and we are moving from smaller institutions to a much larger entity,” said Al Gharabally.
Greenstone currently employs 16 investment banking professionals that operates across different divisions across the firm.
