MENA Private Equity Association: State of Middle East’s PE Industry


July 31, 2015


The non-profit organisation MENA Private Equity Association has published its latest report in the private equity and venture capital industry of the Middle East and North Africa. The ninth report found that private equity in the region continues to interest investors and deal volumes in the region are growing.


The Findings


The report found that the region has seen investment volumes increasing. In 2013, the region attracted 66 investments but by last year, this had risen to 72. Furthermore, the deal volume didn’t just increase but deal value also went up. The deal values increased to $1.5 billion, which is a 118% increase from the levels the previous years.


Last year has been a big year for Middle East and North African private equity. There have been a number of large deals, such as the Fajr Capital, Mumtalakat and Blackstone making a joint investment in GEMS Educations. The large PE consortium also invested in National Petroleum Services in 2014.


Imad Ghandour, managing director at CedarBridge Partners and a member of the Associations’ Steering Committee told CPI Financial, “Private Equity has permanently established itself over the past decade as a mainstay in the regional financial market as it successfully overcame several economic and political crises. It has now several well established players focused on funding and nurturing tens of young companies of all sizes and in all sectors. Its impact on the development of the regional private sector is increasingly being felt as such company blossom into strong regional and global operators, each in their respective field.”


Regional Winners


The region’s countries have not been equally attractive to the investors. Investors have trusted the United Arab Emirates and Saudi Arabia the most; with 75% of investment activity in the region took place in these areas. But interestingly, this is only once scaled to reflect the scale, stability and availability of larger target assets in these countries. If you only account for the transaction volumes the two Middle East nations account for a little lower proportion at 31%.


Investment activity during last year was driven by Lebanon. The country has been especially good at creating a booming small and medium sized company boom, with the Lebanese Central Bank further stimulating interest in the country.


There are also certain industries that continue to perform better. Oil and gas continue to attract investment, while the demographic changes in the region are adding up new sectors into the mix. Education, food and beverage have become key sectors for investors.


In addition, healthcare remains as the core focus for many funds and firms. Perhaps a bit surprisingly, it was information technology businesses, which witnessed the most transactions.


The region still has to be careful, as the region has plenty of political turbulence that needs solving. But strong investor appetite could help continue to give more sparks to the industry and strong performance by funds and investment assets is sure to kick off the region’s private equity industry to further records.


If you are looking for deals in the industry and the region, check out the DealMarket website.

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