Amwal AlKhaleej CEO cites opportunities for private equity at Wharton forum

For the remaining three quarters of 2009, there will be select activity in the private equity sector. Historically, the private market has had lower valuations when compared to the public markets. Today, the reverse is true, which indicates sellers have not readjusted valuations to reflect the current market conditions.

However, due to the depressed valuations in the Public markets, there are new potential investment opportunities such as private investment in public equities (PIPE) with an active role for Private Equity Firms.

Although interesting from a financial perspective, taking public companies private (i.e. known as public to private transactions) will be somewhat difficult to execute in the key markets in the Middle East given the regulatory framework that tend to strongly protect retail investors.

The Wharton Global Alumni Forum where Amwal AlKhaleej was a lead sponsor focused on the Middle East as the region continues to play an increasingly important role in the global economy.

Topics such as the challenges faced by Middle East & North Africa (MENA) multi-nationals, new and unexpected obstacles and opportunities for education, culture and the media in the Gulf Cooperation Council (GCC) countries; and the impact of the financial crisis on the Middle East; were all featured throughout the Forum that gathered more than 30 global and regional speakers and an audience of 480 professionals.

Mr. AlKhudairy, CEO of Amwal AlKhaleej and a keynote speaker at the event cited three regional pillars as providing growth prospects in 2010 for private equity firms.

"The Middle East can not escape events happening in the global arena. For the private equity sector, 2009 will be a year to focus on existing investments and portfolio companies, maybe PIPE opportunities -although this is a momentary phenomenon."

"In the medium to long-term, Amwal AlKhaleej is optimistic about future growth prospects given the unique dynamics of the region. A young and growing population is going to be demanding more services across the board. Capital surpluses held by most regional governments will see continued investments in the local economies throughout 2009."

"Finally, a strong and continuous Government commitment to reform the regulatory environment indicates that once the uncertain times are over in the global arena, the Middle East will be well placed to create significant growth opportunities."

During the Forum, Mr AlKhudairy also provided an overview of the private equity industry in the Middle East and highlighted the proliferation of funds and capital in 2007 and 2008, fuelled by economic growth and excess liquidity in the region as well as increased awareness of private equity among potential sellers and banking institutions.

Recent global events have provided a backdrop of a slowdown in regional private equity activity, which is expected to continue into 2009.