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Wed 15 Jun 2011 10:34 AM

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Gulf Capital launches $300m regional credit fund

Investment firm says has three deals in the pipeline for existing private equity fund

Gulf Capital launches $300m regional credit fund
Gulf Capital sees an acute need for financing in the MENA marketplace

Abu Dhabi’s Gulf Capital plans to raise $250-300m in a credit fund to invest in acquisitions and offer capital to regional companies, its CEO said Tuesday.

The fund, Gulf Credit Partners, will be launched by the end of the year and will target sovereign wealth funds, pension funds and insurance firms, said Karim El Solh.

“The idea was generated out of an acute need for financing and funding in the marketplace. There are companies that are growing very fast but are not able to fund themselves adequately in the local markets,” he said.

“Banks typically here are asset-based lenders [so] they’ll only take collateral and lend against it if they do. You have some very promising companies growing very fast, very profitable but they are asset light.”

The ten-year credit fund is expected to yield 15 percent annually. Gulf Capital, which has $1bn in assets under management, said it would commit $75m to the fund. 

Unlike traditional asset-based lenders, the financing provided will be based on the cash flows generated by the borrower, El Solh said.  

The asset manager launched a $533m private equity fund last year, 38 percent of which is already committed. Solh said the firm has three deals in the pipeline, which would take the total amount invested up to 50 percent by the end of the year.

“We have three transactions in the pipeline, one in the power sector, one in the outsource services sector, and one potentially in the food sector. If we close these deals by the end of the year we’ll reach 50 percent investment out of the total $533m. We’re focusing mostly on the UAE, Saudi Arabia and Egypt,” he said. 

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