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Thu 8 Jan 2009 07:37 AM

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Saudi tops Mideast buyout firm's hitlist for 2009

Abraaj Capital chief says it is eyeing listed acquisitions with view to taking them private.

Abraaj Capital, the Middle East’s biggest private buyout firm, aims to acquire publicly traded companies in countries from Saudi Arabia to Turkey as it seeks to benefit from falling share prices amid the financial crisis, it has announced.

The Dubai-based company, which manages more than $7.5 billion in assets, is considering dozens of buyout opportunities, a “fair proportion” of which are listed companies it wants to take private, Arif Naqvi, Abraaj’s Group CEO, said.

The best opportunities are in Saudi Arabia, Algeria, Libya, Turkey and India in industries including oil and gas, health care and education, Naqvi said.

“There are companies on the market today that I would salivate to buy at these levels,” Naqvi added. “So will you see us buying companies on the stock market and taking them private? Without question, yes.”

Share prices in Gulf Arab countries have crashed since the onset of the global credit crisis as foreign investors fled, lending grew scarce and on concerns the region’s once booming real-estate industry is poised for a slowdown.

Saudi Arabia’s Tadawul fell 56 percent in 2008, while benchmark indices in Dubai dropped 72 percent and in Abu Dhabi by 47 percent.

Abraaj, set up in 2002, accounts for about 25 percent of all private equity funds raised in the Middle East and its co-investors include the region’s biggest sovereign and pension funds.

Abraaj will wait until share prices of target companies have been stable for three to four months before making offers, Naqvi said. At this stage an offer will be “termed opportunistic.”

Abraaj is “having a dialogue” with the shareholders or managements of several companies that it didn’t identify. Loans to part-fund some buyouts are still available despite the credit environment, he said.

“The most exciting opportunities within the Gulf are in Saudi Arabia and will continue to be in Saudi Arabia,” Naqvi said. “There are opportunities that exist in Turkey despite the currency, and India is going to have fabulous opportunities.”

Naqvi added that he expects to complete about four to five deals on average every year and to own stakes in a maximum of about 60 companies at a time.

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