Private equity crucial for GCC economies

The region's private equity houses manage more than $13bn in more than 70 funds and are playing a significant role in the creation of 47 million extra jobs required in the Middle East and North Africa over the next decade, say the organisers of the second Private Equity Forum to be held in Dubai from 22-26 June 2008.

Private equity takes on riskier investments in innovative sectors, encouraging an entrepreneurial culture crucial for the region's economies, said Swati Taneja, director of the Forum organised by IIR Middle East. "Above all, perhaps, private equity is offering potentially high-returns for the large liquid asset pool of the Gulf Co-operation Council countries and attractive investment opportunities for high net worth individuals."

Private equity opportunities are emerging in a number of key areas including family-dominated companies rationalising their operations; and enterprises wanting to increase operations, extend their geographic spread or form new partnerships.

The Forum will include a special presentation followed by a panel discussion and Press conference featuring key executives from Ithmar Capital and associates to introduce an exclusive study, in association with Dow Jones, on the impact of private equity on economic diversification in the GCC.

According to previous studies by Ithmar Capital and Dow Jones, within the GCC over 90% of all commercial activity is estimated to be controlled by family enterprises. These firms hold combined assets of more than $500bn and employ 70% of the workforce.

Private equity has been the foundation for success for family firms the world over. For example, family businesses in Europe which partnered with private equity firms increased exposure to new markets by 60%, with two-thirds outperforming their competition.

Governments are also increasingly partnering with the private sector to diversify away of oil dependency. Infrastructure accounts for more than 60% of new funds being raised by regional private equity firms.

Dubai-based Ithmar Capital, headline sponsor of the Private Equity Forum, is confident of the future growth of private equity in the region. The firm recently announced plans to raise $1 billion by launching a third close-ended private equity fund. Ithmar Capital currently has $500 million worth of assets under management through two existing funds.

Diamond sponsor M'Sharie also sees "enormous opportunities" in the Gulf private equity sector for discerning players. M'Sharie, the private equity arm of Dubai Investments, has 17 subsidiaries under its umbrella and positioning itself as a dominant player in the sector.

"While private equity deals globally have slowed to a trickle due to the credit crunch, the Middle East's private equity market has not only bucked this trend but has actually managed to achieve record growth in 2007," said Abdul Aziz Yaqoob Al Serkal, Managing Director of M'Sharie.

"The forum is a key platform for regional and international private equity and venture capital professionals, industry players and prominent advisory firms to discuss the current state of the private equity market in the Middle East," said Taneja. "The forum will focus on the significant role private equity can play acting as a catalyst towards a diversified economy."