Gulf Capital Raises $750 Million with its Buyout Fund


October 20, 2014

The Abu Dhabi-based alternative asset management firm, Gulf Capital, announced it has closed its third private equity fund. It was able to raise $750 million, which is a lot more than the company was aiming for earlier this year. It is now looking to invest the fund in a variety of companies.


Gulf Capital launched the fund, GC Equity Partners III, with the hopes of attracting $550 million, but it has now been closed as it reached well beyond the minimum. Majority of the investors were international PE investors, with the hopes of cashing in on the lucrative and ever-growing Arabian Gulf economies.


According to Gulf News, the fund is “the largest private equity fund raising effort in the Middle East over the last three years”. The company’s previous fund, GC Equity Partners Fund II, was able to raise $533 million and provided over 25% compound average internal rate of return.


It is believed that significant number of the investors in the current fund were also included in the previous fundraising effort. Around 60% of the external investors are from the US, Europa as well as Asia. Investors also include sovereign wealth funds and pension funds.


The company is very happy for remaining one of the leading buyout funds in the region. Muhannad Qubbaj, the managing director of PE at Gulf Capital, told Zawya that “these sophisticated institutional investors, be they international or regional, want calculated exposure to the region through investing in the leading private equity platform in the GCC, and we are proud that they have chosen Gulf Capital as their investment partner.”


According to the chief executive, Karim El Solh, Gulf Capital is hoping to invest in wide range of businesses dealing in power and water, healthcare, education as well as oil and gas. Speaking to Reuters, El Sold also said, “We are making offers and talking to companies…we can move very quickly and close deals because we’ve raised the funds”. It is expected Gulf Capital will find medium sized companies in the Middle East, as it is currently investing in wide range of companies in the region in the above fields mentioned.


In addition to closing the fund, El Solh also confirmed the company is looking at the possibility of an initial public offering, as a possible funding option. According to The National there has long been speculation over Gulf Capital’s possible listing on the Abu Dhabi Securities Exchange, although El Solh was adamant this was just among the options the company is exploring. Other possible options include bank borrowing, issuing bonds and even raising more private equity.


The news highlights the trend of private equity moving towards the Middle East and Africa. Data compiled by Bloomberg shows that acquisitions by PE companies in these regions have jumped up by 71% to $4.3 billion this year. It is very likely that buyout firms continue investing in the region and help boost Middle Eastern economic growth. This is a welcomed change after a difficult period for PE in the region, with many buyout funds having to close deals while making significant losses.

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