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“A young and growing population means there are huge opportunities” Fred Sicre, Abraaj |
The Middle East may see bigger than ever private equity deals in the coming months and years as investors left with billions of dollars of unused capital raised just before last year’s oil, property and stock market crashes start to put their money to work. A recent industry report reckons that private equity funds in the Gulf have $11 billion waiting to be invested. With prices now more stable, investment opportunities are once again becoming apparent. The best evidence of this came last month with the announcement that a regional private equity firm is in talks to buy a minority stake in Dubai Ports World. DP World is the Middle East’s largest ports operator and one of the region’s flagship companies. Its $5 billion IPO at the end of the 2007 was the Gulf’s largest-ever listing, but the stock price has since fallen by about 70%.
Zawya Dow Jones, a newswire, says that unidentified government officials named the private equity firm in question as Dubai’s Abraaj – a company that focuses on buyouts in the Middle East, North Africa and south Asia.
Abraaj is in the process of raising an extra $1.5 billion for a new buyout fund, for which it raised $2.6 billion in a first close in October.
In terms of countries, Abraaj is turning its eye towards Saudi Arabia, where it formally opened an office last month. And in terms of sectors, Fred Sicre, executive director at Abraaj, tells Euromoney the new fund will focus on infrastructure, both hard (such as energy and transport) and social (such as health and education).
“A young and growing population and the rise of lifestyle diseases in some counties in our region mean there are huge opportunities in these sectors,” says Sicre. Indeed, Gulf countries have the world’s highest incidence of diabetes
Abraaj’s third and previous buyout fund also has an infrastructure angle. Its most recent acquisition was a majority stake, bought last month for some $360 million, in a struggling power company based in Karachi. Abraaj has already shaken up the management of Karachi Electric Supply Company, appointing around 40 new people, according to Sicre.
The third buyout fund, which was closed at the end of 2007 with $2 billion, is also invested in Air Arabia, a low-cost carrier; Global Education Management Systems, one of the Gulf’s largest privately owned operators of schools; and Acibadem Healthcare, a hospital operator in Turkey.
Private equity funds in the Middle East and North Africa raised a record $6.4 billion in 2008, compared with around $5.7 billion in 2007, according to the Gulf Venture Capital Association’s annual report.
