Opportunities to be found amid downturn, says top private equity leader

"Ladies and Gentlemen, these are difficult times, and we must be extremely cautious in the short and medium terms. But the luxury of private equity is that we take a long-term view on investing, and the long-term outlook for this region is very positive" said Heikal in his keynote address to Super Returns Middle East in Dubai.

Heikal, founder of Citadel Capital, the leading private equity firm in the Middle East with $8.3bn in assets under management, urged that, "We are likely to see five phases going forward, in phase one, private equity firms will need to take a critical look at their existing portfolios, postponing certain investments at the platform-company level and phasing out other investments to accommodate the new realities of a global slowdown."

A second phase, starting six to nine months from now, will see distressed assets begin to appear on the market, the Citadel Capital chairman noted. "Nibbling at those investments may become the order of the day, and turnarounds will be prevalent. Many distressed assets will be on the regional markets over the next three years."

Phase three will see private equity firms consolidating smaller assets into new platforms for growth, he said, while a fourth phase two to three years from now will witness acceleration of regional privatization programs.

"In the fifth phase, finally, we will see exits. The only thing more rewarding than raising money is giving Super Returns to one's investors,"

Heikal said.

Since its formation in 2004, Citadel Capital has returned $2.0bn in cash returns to co-investors in its 14 Opportunity-Specific Funds, which control Platform Companies in industries ranging from cement to agriculture and food, from retail to the complete oil and gas value chain.