$1.5bn raised for MENA in first half 2006

Nine funds have raised $1.5 billion in the MENA region in the first half of 2006, compared to $5.8 billion in total for the period between 1994 and 2005.

Approximately $1.5 billion (€1.17 billion) has been raised through nine private equity funds in the Middle East and North Africa (MENA) region in the first six months of 2006, according to a survey by the Gulf Venture Capital Association and Zawya, a Middle Eastern business information provider.
This compares to 19 funds which raised $3.3 billion during the whole of 2005. According to Zawya’s PE monitor, $5.8 billion of private equity capital was raised in the MENA region between 1994 and 2005.
The largest fund to launch in the period was Global Investment House’s Global Opportunistic Fund II, a $1 billion fund targeting pre-IPO and IPO opportunities. Launched in April, the fund had received over $750 million of commitments by the end of May.
Other sizeable funds to close in the period include Gulf Capital’s $330 million debut fund and a $250 million SME fund managed by Venture Capital Bank, the first Shariah-compliant bank to be established.
According to the survey, the majority of the funds focus on buyout and growth capital transactions, with less than $100 million earmarked for venture capital investments.
In terms of region, approximately $1.3 billion was allocated to investments in the Gulf Co-operation Council (GCC) states, followed by $112 million for the Levant region and $96 million for North Africa.
According to the Gulf Venture Capital Association, fundraising activity in the second half of 2006 is expected to exceed original projections of $3.5 billion, possibly reaching $7 billion.
Funds aiming to close in the second half of the year include Abraaj Capital’s $2 billion infrastructure fund as well as energy and technology, media and telecom (TMT) funds launched by Dubai Islamic Bank and Dubai World with a combined target of $2 billion. The latter is part of a family of funds totalling an estimated $5 billion, which will also include infrastructure, real estate, health and education and general industrials vehicles.
In the first six months of 2006, 18 announced investments deployed approximately $450 million. The Gulf Venture Capital Association said that it estimates 2006 total investments to comfortably exceed the $900 million invested in 2005.
There were just three exits during the period, including HSBC Private Equity Middle East’s sale of AME Info, an online business news and information service based in Dubai, to publisher Emap for $24 million, generating a reported eights times multiple on its original investment. The survey said that exits are expected to “increase significantly” in the second half of 2006.