Dubai-based Abraaj Group has announced its commitment of $30 million to the Auvest MENASA Opportunities Fund which aims to support SMEs in the Middle East, North Africa and South Asia region.
Abraaj said in a statement that it will take on the role of cornerstone investor in the Fund, which intends to raise between $250-300 million to invest in the small and medium enterprise sector.
The commitment by Abraaj also marks the formal launch of the Fund, which is sponsored and managed entirely by the Auvest Group.
Auvest was founded in 2007 by Humayun Shahryar, a former senior executive at Abraaj and most of the members of the Auvest management team have previously worked at Abraaj.
The SME sector in the MENASA region plays a vital role in creating long-term employment opportunities as it accounts for over 90 percent of businesses in most MENASA countries, the statement said.
It added that SMEs in the MENASA region provide 45 percent of employment but only contribute 25 percent to GDP, implying a low level of productivity, as these firms often lack the financial resources needed to invest in the growth of the business.
"Private equity can play a dual role in providing capital and helping SMEs with strategic, operational and financial initiatives, resulting in revenue and profitability growth," Abraaj said.
While the Fund will be sector agnostic, Auvest has identified attractive industries such as retail, restaurants, logistics, packaging, education and healthcare for their investment potential.
Arif Naqvi, founder and group CEO of The Abraaj Group, said: "We are delighted to invest in the Fund and support Auvest's talented and capable management team. We also welcome the opportunity to contribute to the growth of the private equity and SME eco-system in the MENASA region, an objective Abraaj has always proactively supported since its inception.
"It has long been acknowledged that the SME sector in growth markets is a formidable engine of employment and economic diversification. The access to long-term capital will enhance the growth of the sector and allow thriving businesses to take advantage of the underlying opportunity and strong fundamentals of the region."
Humayun Shahryar, founder and CEO of Auvest Group, added: "A vibrant SME sector is critical to reduce income inequality and enhance business productivity. The lack of access to funding is a key constraint to the growth of SMEs in the region.
"This anchor investment from Abraaj represents a milestone for our new Fund and further validates the exciting investment opportunity that exists in the region and the SME sector in particular."
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