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Mon 23 Nov 2009 12:37 PM

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Doubts over pace of Mideast private equity recovery

Shuaa CEO says boost will come from gov't spending on transport and infrastructure.

The Mideast private equity industry will get a boost as local governments invest billions of dollars in infrastructure, but doubts exist over the pace of the sector's recovery, Shuaa Capital's CEO said on Monday.

Middle East governments are expected to pour huge sums into transport and infrastructure projects in 2010, offering fresh opportunities for private equity firms to kick off investments again.

"Infrastructure has become an asset class investors are interested in," Sameer al-Ansari, head of Shuaa Capital and Dubai International Capital, said at a conference.

There is "a huge amount of deals" in upcoming infrastructure projects, Al Ansari said, adding that private equity and governments are likely to join forces.

Like in most parts of the world, the Middle East private equity market came to a standstill in 2009 as liquidity conditions and deal opportunities dried up.

Ansari doubts, however, whether 2010 will signal the year of the sector's recovery.

"We can't wait for 2009 to end, but I wonder if 2010 will be any better," he said.

"Can anyone raise funds in this region? Who's going to do any exits?" he asked.

In addition, the Middle East "is not easy" for some of the world's largest private equity players such as KKR and Carlyle, Ansari said.

"It's very difficult... I really doubt if international players who have enough problems in their own portfolios at home would be really interested in this region," Ansari said.

But Michael Lee, board member at Ithmaar Bank, was more optimistic about a private equity revival.

"The Middle East is relatively well positioned. Global recovery is beginning, strongly led by Asia to which we are close," he said at the conference.

"It's the right time to invest as valuations in certain sectors are low." (Reuters)

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