Abraaj completes first real estate deal

The Dubai-headquartered private equity firm has acquired a ten percent stake in a United Arab Emirates construction company, the first deal from a new real estate fund dedicated to the region.

Dubai’s Abraaj Capital has invested AED40 million (€9 million; $11 million) for a ten percent stake in UAE-based Arab Technical Construction Company (ATCC).

The transaction marks Abraaj’s first investment from the Abraaj Real Estate Fund LP, which was launched earlier this year with a target capitalisation of $100 million and which held an initial close on June 30th.

With a paid-up share capital of AED40 million, 55 percent of ATCC was offered to the public through an IPO, which was more than 70 times oversubscribed. Abraaj’s ten percent stake makes it the second largest shareholder in the company.

Abraaj will be represented on the board of ATCC by Arif Naqvi, CEO and vice-chairman of Abraaj Capital.

The Abraaj Real Estate Fund was set up to invest in leisure, tourism and residential projects and some office and industrial developments across the GCC (Gulf Co-operation Council) region and the Middle East. It may also invest in real estate opportunities in South Asia and Western Europe.

The fund, which has a minimum investment threshold of $1 million plans a drawdown of 25 percent of commitments upon subscription, with the remainder to be committed over the four-year commitment period of the fund.

Commenting on the opportunities for the new fund, the first of its kind specifically dedicated to real estate in the region, Simon Davies, CFO at Abraaj said: “ The Fund’s objective is to achieve superior returns by making investments in a diversified portfolio of structured real estate investment opportunities in the region. We are looking at some very exciting prospects in this sector, which is flourishing, supported by surplus liquidity, good products and ongoing regulation and law reforms.”

Real estate activity in the region is on the increase as evidenced by ambitious plans for the creation of a new financial exchange in Dubai. The Dubai International Financial Centre is expected to be completed by 2007, creating 50,000 jobs and comprising 45 buildings on a 110-acre site in the main centre of Dubai.

Abraaj also manages the largest buyout funds in the Middle East region with $150 million in committed capital through two funds – the $116 million Abraaj Buyout fund and the $34 million Special Opportunities fund.