PRIVATE EQUITY, WHERE COMPANIES raise funds from investors and buy stakes in private companies which they later sell, is fast becoming one of the Middle East and North Africa's most important regional industries. Figures for 2010 show it is recovering from the global slowdown, with deals worth $933 million last year compared to just $680 million in 2009. This year, some $3.8 billion could be raised from 11 new funds for private equity and related initial public offerings (IPOs) on MENA stock exchanges, analysts in the GCC report.
Significantly, some of MENA's most important private equity firms remain buoyant about the long-term prospects for investors, despite the political turmoil that has swept through Egypt, Tunisia, Bahrain, Libya, Algeria, Morocco, Yemen and other parts of the Arab world since January. Citadel Capital, a Cairo-based player, which now has more than ,8 billion under management, said in February that the dramatic changes witnessed in recent weeks could produce more stability for the region as a whole. "We see very compelling opportunities for long-term private equity investors in Egypt and beyond," it added. "We hope these opportunities will be further underpinned by greater democracy and accelerated reforms."
Ammar Al Kudairy, the managing director of Amwal Al Khaleej in Saudi Arabia and chairman of Egypt's Arab Cotton Ginning company, believes the turmoil could be "short-lived. Going forward," he added, "the economic policies that have been implemented over the past few years have yielded some positive results. We would hope they will continue with the same philosophy of open markets."
Mustafa Abdel-Wadood, managing director of Dubai-based Abraaj Capital, is even more optimistic. "Private equity is a long-term game and I totally stand by the long-term story and the economic reform programme that has been implemented in Egypt," he noted, adding: "I believe that programme will continue." Many people in MENA felt that the political upheavals meant the region was moving in a positive direction, he went on to say. "In the long term, there will be more stability in these investment destinations, which all have high growth but which are considered high risk because of their current political structures."
Gulf Capital's chief executive in Abu Dhabi, Dr Karim el Solh, noted that the private equity industry was able to take a longer-term view than...