ME private equity raises record $6.4bn in 2008

Middle East private equity fund managers raised a record $6.4bn in 2008, up more than 10 percent over 2007 and more than double the amount raised in 2005, according to a new report.

The data from Gulf Venture Capital Association's 2008 report on Private Equity & Venture Capital in the Middle East, was released on Monday at the Dubai International Financial Centre.
 
Large size funds were primarily responsible for the growth, with the average fund size in 2008 being $258m, compared with $213m in 2007 and just $177m in 2006.

The trend was driven by the need for more flexibility in structuring deals, as well as the past success of large buyout transactions, according to the report, which was developed in cooperation with KPMG, Zawya, and The Institute for Corporate Governance.
 
Three regional funds have crossed the $1b mark, but the current economic downturn would make it more difficult for all but the most established fund managers to secure the successful closure of these larger funds, the report noted.
 
However, regional funds still had tremendous liquidity with $11b in capital under management that has yet to be deployed, it said.

This "dry powder" gave private equity a strategic opportunity to target companies, given the limited scope of other funding sources available in the current environment, the report pointed out.

It added that during the past four years, Egypt, Saudi Arabia and the UAE had been the largest recipients of private equity funds, at 33 percent, 15 percent and 14 percent respectively, with the majority of funds focused on the Middle East and North Africa (MENA).

Moreover, regional players were experiencing an increasing request for funds with a mandate that included MENA, and to expand and include South Asia, Southeast Asia and/or Africa, the report said.
 
Portfolio acquisitions during 2008 were healthcare, transport, power and utilities and construction, with healthcare tipped to remain a top recipient of private equity funds in the next few years.

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