Report finds US$630bn in investment opportunities
Following the launch of the largest fund in the region to concentrate on local infrastructure investment, Abraaj Capital has released a report showing the high level of investment demanded regionally.
The study found that there are more than US$630 billion in regional investment opportunities, which it hopes to target through its US$2 billion Shariah compliant Infrastructure and Growth Capital Fund (IGCF).
The fund is co-sponsored by Ithmaar Bank and Deutsche Bank, and is one of the largest funds raised in the region.
The fund will target an internal rate of return (IRR) of 20% per year and run for 10 years. Its main focus will be to take stakes in greenfield projects, growth capital investment opportunities and to participate in large scale privatisations and buyouts.
The sectors the fund will focus on are utilities, healthcare, education, transportation and ports, oil and gas, petrochemicals, industrials, and mining. Research conducted by Abraaj Capital suggests that the investment opportunities in transportation and ports account for more than US$188 billion.
Mustafa Abdel-Wadood, managing director of Abraaj Capital, said: “The initial response from investors to this fund has been extremely strong. In partnership with two outstanding institutions, we are delivering an unparalleled opportunity for investors to participate in the shared economic growth of the region.
“Based on the response to date, it is clear that our confidence in this offering is widely shared.”
HE Sheikh Salman Al Khalifa, managing director of Ithmaar Bank, said: “Our experience in Islamic finance will complement the global strength and intellectual capital of Deutsche Bank and the proven track record of Abraaj Capital to create the perfect partnership.”
Among other findings in the report by Abraaj Capital, entitled ‘The Infrastructure Investment Requirements of the MENASA Region’, is that over 200 privatisations have been announced in the Middle East, North Africa and South Asia region across a variety of sectors. The study estimates that the privatisation pipeline will reach US$1 trillion during the next decade.
Shariah compliant finance is the fastest-growing area in the global finance industry, while private equity is currently the fastest-growing asset class in the Middle East.