Big upturn predicted in MENA investments - Deloitte

New private equity investment activity is expected to significantly increase in the MENA region in the coming 12 months, according to a new survey released by Deloitte.

The rise is expected as a result of lower valuations, an increasing number of distressed opportunities, and a long-hoped for improvement in overall economic conditions, the latest MENA Private Equity Confidence Survey said.

"The air of uncertainty hanging over IPO markets gives the PE industry reason to believe that companies needing funds to expand or to refinance bank debt will turn to private equity in increasing numbers in the coming year," said Chris Ward, CEO of Deloitte Corporate Finance in the Middle East.

"However, with our third MENA Private Equity Confidence Survey coming at a time when the region is still feeling the impact of the global economic downturn, it is not surprising to find that the bullish outlook of previous years has been replaced by a more cautious approach."

The survey revealed that 78 percent of respondents expect investment activity to increase in MENA in the coming 12 months while the pharma/biotech/healthcare sector is predicted to yield the most opportunities in the coming year.

Governance, market regulation and human capital deficiencies were cited as the three top challenges facing the MENA private equity industry going forward.

"While the industry believes it is a good time to buy, it is less convinced of the merits of selling in this climate and, as a result, exit activity is expected to decline in the coming year," added Ward. "In turn, this will lead to hold periods lengthening and a negative impact on returns."

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