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Thu 15 Jul 2010 12:42 PM

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Standard Chartered eyes Mideast private equity deals

Taimoor Labib says he is looking at opportunities in health and retail sectors.

Standard Chartered eyes Mideast private equity deals
(Getty Images)

Standard Chartered  expects to complete private equity deals in the Middle East in 2010, but sees the unhealthy IPO market and a price expectation gap between buyers and sellers as barriers to the sector's revival.

Taimoor Labib, recently named head of the emerging markets-focused British bank's private equity business for the Middle East, North Africa and Turkey, is eyeing opportunities in the manufacturing, health and retail sectors with a focus on the United Arab Emirates and Saudi Arabia.

"Generally speaking things should improve going forward. Investors and owners feel more comfortable about the business and macro environment," Labib said.

"One challenge is still the gap between sellers and buyers. Family-owned businesses which have been around for generations think highly of their companies, and rightfully so," he said.

"The other issue is exits: IPO markets have been frozen for the last couple of years. We are seeing some improvement. Once the UAE IPO market picks up as well that will be very helpful to our business," he added.

Private equity investors typically make money by acquiring a business and then selling it on at a profit via an initial public offering (IPO) on a stock market.

The private equity industry in the Middle East was seen as very lucrative before the credit crisis hit the region, after which liquidity dried up and good buying opportunities became scarce.

The regional private equity sector, however, is sitting on an estimated $10 billion in cash, according to analysts' estimates. Others in the industry are also predicting an upturn.

Standard Chartered has invested $2.3 billion globally in private equity deals since 2002, mainly in Asia, India and Africa, though it has not completed any deals in the Middle East since it set up shop there in 2008.

Its strategy is to take sizeable minority stakes and exit within two to five years. The bank invests its own funds and does not rely on third-party investors.

"Our sweet spot is $50 million to $100 million of equity per transaction in medium to large companies," Labib said. (Reuters)

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