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Tue 14 Jul 2020 02:55 PM

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Ample opportunity for Middle East investors despite gloomy predictions, say VC experts

Prince Khaled bin Alwaleed bin Talal and Fadi Ghandour said investors are still seeing opportunities

Ample opportunity for Middle East investors despite gloomy predictions, say VC experts

According to a recent report from INSEAD business school and start-up data platform Magnitt, 58 percent of MENA investors are looking to delay exits, with lower valuations affecting 42 percent of start-ups in investors’ portfolios.

Despite a significant number of Middle East and North African investors seeking to delay exits, experts believe that investor appetite still remains despite the Covid-19 pandemic and impact it has had on local businesses.

According to a recent report from INSEAD business school and start-up data platform Magnitt, 58 percent of MENA investors are looking to delay exits, with lower valuations affecting 42 percent of start-ups in investors’ portfolios.

However, experts contacted by Arabian Business - including Prince Khaled bin Alwaleed bin Talal and Fadi Ghandoursaid that the current climate still as ample opportunity for investors.

“Investors goals are to help support and grow the businesses they invest in, but ultimately to secure attractive returns,” said Ahmed Alwan, head of strategy and corporate development at Hub71. “With asset prices subdued due to the pandemic, there are clearly opportunities for investors to deploy capital even in the current climate.”

“Shrewd investors, and especially ones with a medium to long-term perspective, know that the fundamentals of well-run business strategies offer significant value,” he added.

Those looking to exit, Alwan added, face a “different picture.”

“One of the keys to a good exit strategy is timing, so it’s understandable that people may be looking to delay their exit at this time and look to a later stage when valuations are optimal,” he said.

Prince Khaled bin Alwaleed bin Talal, the founder and CEO of KBW Ventures, said that in the case of KBW, “the pandemic hasn’t changed any strategic direction in terms of exits of our portfolio companies.”

“There wasn’t anything around exits or going public in the pipeline for our investments, so it’s business as usual for us,” Prince Khaled added. “My thoughts are that if companies were planning to exit, they should continue and stick to their plans. I don’t agree with the popular notion that investor appetite has decreased.”

No cause for concern

Fadi Ghandour, the executive chairman of Wamda Capital, said that he saw no cause for concern when it comes to investor appetite in the region, even if he agrees with firms that are avoiding exits in the current climate.

“I think there are good deals coming up,” he said. “But founders are smart not to exit now as it’s not a normal time. Valuations are not going to be great. It’s a good time to continue growing their businesses and continue looking for the next story.”

For some struggling companies, particularly those who still primarily operate in the brick-and-mortar space, the pandemic presents an opportunity to catch-up with some of their more digitally savvy rivals.

“This is a way for them to get into digital very quickly, rather than build it from scratch. There are plenty of companies and talent out there you can look it. It’s not about acquisitions, but it’s a ticket now,” he added.

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