Challenges and Opportunities we see in Private Equity in the Middle East (MENA) regionUser Rating: / 0

PoorBest Financial MarketWritten by Ziad K. Abdelnour Wednesday, 28 July 2010 07:18

Since the oil shock of the 1970s, petrodollars have found their way back into the West, often as investments in private equity funds in Kuwait. The investors ranged from wealthy merchant families in Kuwaitand Saudi Arabia to the nascent sovereign wealth funds of the region. There are many family businesses based in the Gulf, and many have made direct principal investments in companies or are even limited partners in private equity firms. Yet for some time the region was mainly known as a good place to raise funds, not to do deals.

As oil prices stagnated in the 1980s and 1990s, economic growth and bureaucratic governments dampened private sector opportunities. Then in 2002 the price of oil started steadily climbing again, causing a renewed stream of surplus liquidity to search for profitable investment outlets. This, coupled with broad economic and regulatory reforms by many countries in
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Initially, most of the surplus capital was invested in local equities and property, but gradually some found its way into the region’s embryonic private equity funds. When oil prices later began to soar they caused capital to gush into the Gulf at an unprecedented rate, and private equity rose sharply in popularity. Now, there are nearly 100 funds focused on the region that have raised close to US$20 billion in capital, according to Preqin, a private equity data provider.

The attractions of the asset class are clear. Stoked by rising oil revenue, the MENA region’s annual real economic growth rate has comfortably averaged
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What’s most disturbing today though is that there hasn’t been a single bad news story about any major private equity firm in the Middle East since the start of the financial crisis, except of course the news coming out of a few publicly listed investment groups such as Invest corp
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While we believe there will always be opportunities, we also expect to see a lot of pain. One of the most candid admissions came from David Rubenstein, the co founder of Carlyle Group, when he said at the recent SuperReturn Middle East private equity conference that Private Equity firms helped inflate the credit bubble by buying
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Well, despite the favorable economic backdrop and recent proliferation of funds, the deal flow is very small. Most of the private equity funds in Dubai are actually investing in the non Gulf region. Further, it is a
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Also,
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While the local funds that know the region intimately are still staffed with lots of financial
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So at the end of the day, we believe that even survivors will need to seriously rethink their business models, most likely opting for increased specialization, smaller funds, greater emphasis on earlier stage investing, improved economics for investors and more operationally focused teams.

One of the most important factors for most firms to consider when repositioning themselves will be their relationships with family businesses, who in most cases are also clients or investors. In the Middle East, these family groups constitute more than 70% of
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It is ironic that these family groups have inadvertently funded one of the biggest entrepreneurial experiments the region has ever seen: the establishment of the regional "Private Equity Firm". This new breed of entrepreneur claimed
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It is highly
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We at Blackhawk Partners believe that
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Despite the challenges articulated, it is our view that private equity has a very bright future for those who adapt and will play an increasingly pivotal role in the development of the private sector. Based on our internal estimates we think it likely that private equity will grow into at least a $7 $10 billion per annum industry by 2016 which bodes well for those who are willing to persevere through the crisis. For those still clinging to their old traditions of doing business, be prepared
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Ziad K. Abdelnour is a deal maker, trader and financier with over 20 year experience in merchant banking, private equity, alternative investments and physical commodities trading. Mr. Abdelnour has been a trusted advisor to a number of the largest family offices in the United States, Europe and the Middle East and a turnaround investor in a number of companies where Mr. Abdelnour’s corporate capital commitment through Blackhawk came either through acquiring those and other companies through their distressed debt or through the chapter 11 process.

Ziad K. Abdelnour

Ziad K. Abdelnour is a deal maker, trader and financier with over 20 year
100 Chaussures Authentiques Nike Free Run 3 Dark Grey Prism Bleu Vous Obtiendrez Vous Vouliez Ici experience in merchant banking, private equity, alternative investments and physical commodities trading. Mr. Abdelnour has been a trusted advisor to a number of the largest family offices in the United States, Europe and the Middle East and a turnaround investor in a number of companies where Mr. Abdelnour

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