After a dull investment in the wake of the ongoing Arab turmoil, a mix of excess liquidity and renewed business confidence has triggered new investment activities in the private equity sector, said the CEO of Al Masah Capital in Dubai on Saturday.
According to Shailesh Dash, founder and CEO of Al Masah Capital, Gulf Arab private equity fund managers have raised approximately 16.5 billion U.S. dollars in the last 10 years. Private equity or PE describes investments into companies which are not publicly listed at a stock exchange. In 2011, PE deals in the region slumped by 90 percent year on year as investment sentiment was hit by the unrest in the Arab world.
Dash added that according to two PE research studies done by consulting firms Preqin and Bain & Company, PE firms in the Gulf Arab region have between 3.8 billion to 5 billion U.S. dollars " dry powder" in their cash boxes -- money that looks for investments with high rate of returns outside stock markets.
Coupled with the positive business environment since the Arab turmoil, investment activities have started picking up recently, said Dash, "and we are seeing more transactions happening in the GCC (Gulf Cooperation Council)."
Richard Clarke, managing director of transaction and restructuring services at consulting firm Deloitte Middle East, said PE volumes and values were "significantly increasing in 2012" as compared to previous years.
On Sept. 6, Jordan-based PE company Foursan Group bought 6.6 percent of Jordan Dubai Islamic Bank, becoming the bank's second largest stakeholder. In June this year, Abu Dhabi's Gulf Capital entered the Saudi real estate market by joining forces with U.S. related companies in a 267 million dollars joint venture to invest in the property in the kingdom.
Dash and his team at Al Masah have raised collectively almost 50 million U.S. dollars for 2 PE platforms and invested the money in 7 healthcare entities and one school.
"We feel that Chinese investors could be interested in Gulf Arab PE as both a diversification of their investments from more developed markets such as the United States, Europe and Asia, and also as a route to expand their businesses into the GCC," said Dash.