MENA-Based Private Equity Investors – July 2013

by Francesca Braganza

  • 16 Jul 2013
  • PE

MENA-based investors make-up a relatively small percentage of all LPs actively investing in private equity funds, as tracked by Preqin’s Investor Intelligence, representing 2% of investors. However, investors based in this region contribute a significant amount of capital to the asset class and represent almost 5% of the overall total assets figure of all investors in private equity. Preqin’s Investor Intelligence currently tracks 4,775 active investors in the asset class (excluding fund of funds managers) with aggregate assets under management of $106tn, over $5tn of which is represented by MENA-based LPs.

LPs based in the MENA region are made up of a range of investor types, with the majority (27%) being investment companies. Banks and investment banks also represent a sizeable proportion (22%) of MENA-based investors, with sovereign wealth funds representing 10%. Other investor types within this region include family offices, corporate investors, asset managers, endowment plans and pension funds.

With regards to geographic preferences, over two-thirds (65%) of all LPs in the MENA region actively investing in private equity have a preference for vehicles focusing on opportunities in regions outside of North America, Europe and Asia, most notably the MENA region and GCC countries. MENA-based LPs also have an appetite for investment opportunities in Europe, with just under half (47%) having shown a preference for funds focusing on the region. Investment opportunities in Asia and North America are also sought after, with 40% and 44% of LPs respectively having shown an appetite for such vehicles. A smaller proportion of investors (36%) seek opportunities in more generally in emerging markets, and 34% seek global exposure to the asset class.

As well as investing in a range of geographies, MENA-based investors also have exposure to a variety of different private equity fund types. Fifty-seven percent of investors in this region have demonstrated an appetite for buyout vehicles, with 49% showing a preference for growth funds. Venture capital vehicles are the third most sought-after fund type by these investors, with 42% holding a penchant for them. Other types of funds which have proven to be favourable among MENA-based investors include secondaries, distressed debt, funds of funds, special situations, natural resources and mezzanine vehicles.

Despite investors in the MENA region representing a fraction of the total number of LPs investing in private equity, the region has an aggregate target allocation to the asset class of over $55bn, with an aggregate current allocation of more than $46bn. Of all investors based in MENA tracked by Preqin, 26% are planning new private equity fund commitments over the next 12 months, with buyout and growth vehicles focusing on European opportunities likely to be the most targeted strategy.

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