Private equity reshapes regional economies

The region's private equity houses currently manage in excess of $13bn in more than 70 funds and are playing an increasingly significant role in the creation of the millions of extra jobs needed in the Middle East and North Africa over the next decade, according to the organisers of the second Private Equity Forum, which opens in Dubai on 23 June 2008.

The growing impact of the private equity industry on the economic diversification of the Arabian Gulf will be the subject of a special study to be released at the forum, which runs until Thursday (26 June 2008) at Al Murooj Rotana Hotel, Dubai.

"Private equity encompasses investing in companies whose shares are not traded on stock exchanges and runs from small venture capital investments in start-up companies to multi-billion dollar buyouts of well known public companies,"

said Swati Taneja, director of the Forum organised by IIR Middle East.

In the region, 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 geographic spread or form new partnerships. "Private equity deals in established economies may be drying up but billions of dollars are still flowing in the Middle East," said Taneja.

"In the Arabian Gulf, private equity has tended to focus on taking stakes in companies to help them become more efficient and expand into new markets. The regional private equity sector has also been biased towards real estate and infrastructure investment. Today, private equity funds and firms are looking further afield for opportunities. Favourite sectors include oil, gas and mineral firms, telecoms and banking."

The study to be released today (23 June 2008) at the forum, - Catalysing Diversification: Private Equity and the GCC, has been produced by Ithmar Capital - headline sponsor of the forum - in association with Dow Jones.

Ithmar Capital currently has $500m worth of assets under management through two existing funds. Diamond sponsor is M'Sharie, the private equity arm of Dubai Investments, which has 17 subsidiaries under its umbrella.