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The Make-Up of Private Equity Investors in the Middle East and Israel – December 2013

by Alexander Nikas

  • 10 Dec 2013
  • PE

The Middle East and Israel is a region of increasing wealth and growth that has undergone major evolution in its private equity industry over a relatively short space of time. The region’s LP base represents a significant source of capital for GPs based all over the world, particularly sovereign wealth funds, wealthy families and high-net-worth individuals that have been stimulated by the regions’ market liberalization and economic development.

Preqin’s Investor Intelligence currently tracks 135 Middle East and Israel-based investors that are either currently active, or considering investing, in private equity funds. United Arab Emirates accounts for the largest number of LPs which are either active or considering investing in the private equity asset class, accounting for 28% of investors within the region. The second most active investor group by country is Israel; 19% of Middle East and Israel-based investors expressing an interest in the private equity market are based in the country. Saudi Arabia takes third place, making up 16% of investors based in the Middle East and Israel.

Investors in the Middle East and Israel have aggregate total assets of $3.1tn. Middle East and Israel-based institutional investors (excluding fund of funds managers, which have a typical allocation of 100% of total assets) are, on average, above their target allocations to private equity of 17% of total assets, with an average allocation of 19% of total assets to the asset class.

In terms of investor types, investment companies are the most common among investors in the Middle East and Israel, making up a quarter (25%) of investors in the region. The second largest pool of investors are banks, which account for 17% of LPs in the region. This is followed by family offices, which account for 10% of all investors in the Middle East and Israel.

Preqin’s Investor Intelligence product reveals that Middle East and Israel-based investors have a clear preference for buyout funds. In fact, 73% of investors in the region have a preference for, or have previously invested in, this fund type. The second most attractive fund type for investors in the region is growth, with 67% of investors having previously invested or currently showing an interest in this fund type. Venture capital funds are also attractive to investors in the Middle East and Israel, as 67% of active investors have shown some level of interest in venture capital funds.

The four largest investors in private equity based in the Middle East and Israel are the Kuwait Investment Authority, Dubai International Capital, the Arab Fund for Economic and Social Development, and Harel Insurance Investments. Together, these four private equity investors have a total of $43.6bn allocated to private equity, equating to 86% of all capital allocated to private equity from investors based in the region.

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