Robust fundamentals

Private equity deals in established economies may be drying up but billions of dollars are still flowing in the Middle East. Recent data shows private equity in emerging markets mergers and acquisitions little changed in the first quarter of 2008 against the same period last year, valued at some $8.3 billion.

According to recent reports, new amounts committed to private equity funds in the Middle East more than doubled in 2007 to $6 billion. This brought the total money under the management of private equity to around $13.3 billion in nearly 80 funds.
Egypt has been the leading recipient of private equity investments over the past decade with a market share of 37%. The United Arab Emirates comes second with 19% of investments. Saudi Arabia's share also rose sharply to 15%.

In the Arabian Gulf, private equity has to a large extent been focused on growth capital by taking stakes in companies to help them become more efficient and expand into new markets. It has also been biased towards real estate and infrastructure investment.

In the future, it is expected the buyout market will increase as more family firms focus on fewer businesses and go regional. Private equity funds and firms are also looking further afield for opportunities. Favourite sectors include oil, gas and mineral firms, telecoms and banking.