Investcorp heralds golden age for Gulf private equity

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'The private equity industry in the Middle East has matured,' he said. 'We are suddenly seeing many parallels with the Western private equity environment a decade ago. The opportunity is here and the environment is right, it is now the golden age for private equity in the Gulf.'

Long acknowledged the impact of the current financial turmoil on private equity: 'There are important lessons to be learned and strategic choices to be made… all of us are affected,' he said. However, history had shown that such market conditions also gave rise to buying opportunities and he emphasized that private equity would keep its place as a significant asset class.

Drawing on Investcorp's recent experience in setting up its business making private equity investments in the region, Long laid out the ways in which he saw Gulf private equity developing. He explained how the industry would become bigger and play an important role in the development of the local economies as local companies would benefit from relevant private equity expertise and capabilities. In future, the returns in the Gulf would be driven by active ownership rather than general market growth, multiple expansion or the use of leverage.

He also expected industry consolidation: 'A few private equity firms will dominate. There are more than 50 firms in the region, but only a handful account for more than 80% of the funds raised and deployed. That level of concentration will continue in the future,' he said.

Long envisaged that both control investing and growth capital investing would drive the industry. The Gulf was both a 'buy in' and a 'buy out' market and the successful firms would be the ones that did both. In terms of infrastructure, corporate governance practices and capital markets would continue to improve in the region. This was a major focus of all the regulators in each of the Gulf markets.

Long concluded: 'I am very bullish about the opportunity for private equity in the Gulf. I am also bullish about how Investcorp has responded to this opportunity, about the team we have in place, the dynamics of the business, and the appetite of our clients for such investments.

'The private equity fundamentals here are better today than they were even five years ago. They will be better five years from now than they are today. We are very excited about the future of private equity in this dynamic region.'

SuperReturn Middle East took place from 12th-16th October 2008 at the Intercontinental Hotel, Festival City, Dubai.