Private equity in the Middle East suffered a difficult period at the end of the last decade, as challenging global market conditions and the bursting of local asset bubbles left groups unable to exit existing investments without major losses.
The economic rebound seen both locally and internationally has seen deal-making revived in the last two years, with many now divesting stakes and looking for new opportunities.
Dubai-based Ithmar Capital, which manages over $800 million in investments, is looking to raise AED3 billion ($816.8 million) for new assets, particularly in the education and healthcare industry, two sources said.
An Ithmar executive confirmed plans for an initial public offering but declined to elaborate.
A third source, who like the others did not want to be identified because of the sensitivity of the deal, said the fund is expected to finalise details in the next few weeks, while a separate source said the fund had always planned a Dubai IPO.
Meanwhile, Abu Dhabi-based buyout firm Gulf Capital is considering an IPO to access more capital and expand its offering in the region, three people said, with one saying the listing was earmarked for the Abu Dhabi Securities Exchange before the end of the year.
Gulf Capital declined to comment when contacted by Reuters.
While a number of Western private equity funds are publicly listed, including Blackstone and Carlyle Group, there are currently no such entities on the UAE exchanges.
Restrictive local regulations, which forced companies to list 55 percent of their capital and prevented the selling down of existing shares held by owners, have put off many companies - including private equity firms - offering shares to the public.
This has driven UAE private equity groups to look abroad - mostly to London - when floating stakes as part of an exit strategy: Gulf Capital sold some of its holding in Gulf Marine Services in March, while Ithmar offloading part of Al Noor Hospitals last year.
However, UAE authorities are introducing changes which will loosen these restrictions, with provisions allowing existing stock to be sold to the public published earlier this month.
Set up in 2005, Ithmar currently has a portfolio of six companies but expects to do deals worth over 1 billion dirhams in 2014 in the healthcare and education sectors across the Gulf, Faisal bin Juma Belhoul, founder and managing partner of Ithmar told Reuters in March.
Gulf Capital, which has more than $3 billion of assets under management according to its website, was established in 2006 and is backed by regional financial institutions, pension funds, family groups and businessmen.