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UAE Bolsters Private Equity Fundraising in MENA region – June 2014

by Luke Goldsmith

  • 06 Jun 2014
  • PE

The MENA (Middle East and North Africa) region is one of the highest growing regions in the world. The region has seen rapid economic growth in recent years and has made large gains on more developed countries during the financial crisis, which had a relatively smaller effect on the area’s prospects. This has made the region very attractive for firms to establish their base and also for private equity firms to target investment opportunities there. 

One of the main reasons for the region’s strong performance as a whole is the strength of the United Arab Emirates (UAE). According to Preqin’s Fund Manager Profiles online service, the UAE is home to far more private equity firms than any other country in the MENA region. There are 43 fund managers based here, accounting for 35% of all the private equity firms in the area. Saudi Arabia has the second largest proportion of private equity firms based in the MENA region, with 15 private equity firms. It should be noted that the 43 UAE firms have also raised the largest amount of capital over the last 10 years, garnering over $5bn in aggregate capital commitments. Many global conglomerates have been setting up in the UAE to take advantage of the nation’s particularly high growth and various government initiatives aimed at improving the business environment for private companies. 

Despite the fact that Saudi Arabia houses the second greatest amount of private equity firms in the MENA region, the country that has gathered the second largest amount of capital is Kuwait. The small state on the Arabian Peninsula has raised $4bn in total capital commitments in the last 10 years. Kuwait is actually home to the largest firm in the region by capital raised over the last decade. Global Investment House (GIH) promotes investment opportunities in the Arabian Gulf Peninsula to international investors and has raised nearly $3bn in the last 10 years. In fact, this figure accounts for 70% of all capital raised by Kuwait-based private equity firms over the last decade. 

Fundraising figures show strong signs that investment in the MENA region is picking up. In 2013, there were nine private equity funds focusing on the area as a whole that successfully reached final close. These funds garnered nearly $4bn in total capital commitments, which is the largest amount raised in a year since before the financial crisis started to take full effect. In 2008, nearly $7bn was raised, which is the highest figure ever raised focusing on the MENA region. The 2013 figure was the third largest amount of capital raised on record, and the fact that there are currently 40 funds on the road targeting a total of just under $12bn is a very encouraging sign for the prospects of the area.

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