Fund targets $100m for investment in Iraq

Two US-educated Arab entrepreneurs have set up a $100m fund for investment in the reconstruction of Iraq.

(PrivateEquityCentral.net) Two US-educated Arab entrepreneurs have launched Amwal (“money” in Arabic), an Iraq-focused fund which will raise $100m for investment in the country’s reconstruction. The fund is being launched by Yousef Al-Essa, a Harvard Business School graduate, and Mohamed Sarhan, a graduate from Duke School of Law, who previously practiced corporate law in New York with White & Case.

 

“The fund will invest directly in projects in Iraq and in ventures outside Iraq that would be investing in Iraq,” Sarhan told Reuters.

 

Amwal emerged from a business plan competition organised by investment bank Morgan Stanley. It is backed by high net worth individuals and institutional investors including TekBanc, the venture capital arm of the Kuwait Fund for Arab Economic Development, and the National Bank of Kuwait.

 

Sarhan told Reuters the firm has so far received commitments of over $50m and hopes to close the fund in another four to six weeks. The fund is expected to be fully invested within two years and expects to return proceeds to investors in from five to seven years.

 

Most of the money will be invested Iraq's tourism, real estate, telecom services and in oil and gas infrastructure. The fund will be a co-investor in most projects.

 

For cultural and geopolitical reasons the private equity and venture capital market in the Middle East has traditionally been dominated by Israel, which attracts more investment than the entire Arab world combined. Middle Eastern entrepreneurs with western backgrounds are trying to change that situation.

 

One example is Jordan-based Foursan Technology Partners, a venture capital firm established in February 2000 to target the Middle East and North Africa technology market. Foursan invests in non-publicly traded start-up and emerging growth information technology ventures in the region, including software development, information services, data communications and networking, wireless applications and services, and Internet delivery, content and eCommerce.

 

The biggest private equity player in the Islamic world is the $1.5bn Bahrain-based Islamic Development Bank Infrastructure Fund, which is managed by Emerging Markets Partnership (Bahrain), which in turn is 60 per cent owned by Washington-based Emerging Markets Partnership and 40 per cent by Bahrain's Shamil Bank. The fund was launched to provide diversified sources of financing for private sector infrastructure projects in the 53 member nations of the IDB, which are spread throughout Africa, the Middle East, and South-east Asia.