Middle East private equity investments to remain positive

Key highlights from the 2011 Report include:

Dr. Nasser Saidi, Chief Economist, Dubai International Financial Centre, said: "There are promising signs of recovery in private equity investment space in the MENA region despite the recent turmoil; investors are looking at Egypt, Tunisia, KSA and the UAE as attractive hubs for investments. While the current status in the region has led to a cautious investment trend, there is a high focus on investing in non-cyclical sectors such as infrastructure and transportation, healthcare, energy, food and agriculture. Global infrastructure investment is expected to reach $ 40 trillion by 2035, primarily in emerging market economies. In MENA infrastructure investment requirements exceed $2 trillion over the coming decade presenting great opportunities, with a growing number of MENA-focused infrastructure funds which have been raised or are being raised to take advantage of these opportunities. However, governments need to create more opportunities for the private sector through privatisation schemes and PPP. This will require enabling PPP legislation and regulations."

Imad Ghandour, Managing Director at CedarBridge Partners and a member of the Association Steering Committee, commented: "Despite the political unrest in the region, fund managers have identified many sustainable pockets of growth that offer substantial returns to investors during 2011. Managers are seeing opportunities in sectors like healthcare and education, and TMT. There is potential growth also seen in the SME space."

Ali Arab, Zawya, adds: "2011 was an encouraging year for MENA private equity, with the industry showing signs of recovery. The positive outlook has continued in 2012, whereby growth capital and buyout funds closed more than 20 deals during the first quarter of this year."

PE firms are taking advantage of the shortage of capital, resulting from the global crisis, to buy well-priced assets. Political risk and slow economic growth have allowed fund managers to invest in quality companies at low valuations, with focus on the technology and export sectors.

Longer holding horizons and more focus on strategic value adding to portfolio companies have characterized PE activity from entry till exiting investments. "After four to five years of acquiring and developing portfolio entities, a number of private equity funds in the region are nearing the end of their lifecycle. Although valuation data is not always publicized, we have seen positive stories among the exits in 2011, and we believe we will see more of the same going forward." - Dale Gregory, Partner, KPMG.

Deal activity throughout the region has been reinvigorated as funds look to deploy capital raised.

The Annual Report is available at: www.menapea.com/2011AnnualReport.