By Stanley Carvalho
Company plans investment in firms whose valuations have been hit by downturn.
State-owned Abu Dhabi Investment Co (ADIC) is planning to launch an international real estate fund, along with four other funds, to invest in firms whose valuations have been affected by the global financial crisis, its head of private equity said.
"The next two years will provide a fantastic time for private equity, a window of opportunity that you will not see in a few years to come," Samir Assaad Samaan told reporters at a private equity forum in Abu Dhabi.
Abu Dhabi, the largest of seven emirates comprising the UAE federation, amassed an enormous cushion of surplus oil export revenues during a six-year rally in crude prices and the government is looking abroad for investments.
"ADIC is launching an international real estate fund shortly and four different funds in four weeks," Samaan said, declining to give details. "Although our focus is the Middle East and North Africa, this is a fantastic time for global real estate."
The investment firm, owned by Abu Dhabi Investment Council, said in March it was looking for companies with solid cash flows in sectors that are likely to be least affected by the economic downturn, such as healthcare, education and telecommunications.
Stock markets in the Middle East and North Africa have been hard hit by global turmoil and valuations have dropped.
Private equity funds in the region have $11bn to invest after raising a record $6.4bn in 2008, the Gulf Venture Capital Association said.
"The capital markets are closed, banks are tight with credit, so there is only private equity capital and we will have to fill the gap," Samaan said.
ADIC will invest in the Middle East and North Africa, Samaan said, declining to give a figure due to company policy.
Valuations have dropped by about 40 percent to 50 percent across all sectors and this would continue for some time as managers rebalance their portfolios to change and adapt to the realities of today's markets, Samaan said.
The group expects deals to emerge in the United Arab Emirates, Saudi Arabia, Turkey and Egypt, ADIC Chief Executive Nazem al-Kudsi said in March, adding that opportunities would arise for small and medium-sized deals of up to $250m.
ADIC is in discussions with large family businesses in the region looking to divest and reallocate some of their businesses, Samaan said, declining to identify the firms.
"Family businesses are yielding some interesting opportunities for us in the region and in the next couple of years this business will play out."
ADIC and UBS Global Asset Management said in November they planned to set up new funds of up to $1bn and would invest over $200m in two infrastructure projects in the Gulf. (Reuters)