Ithmar Capital targets $1bn

The Middle Eastern private firm has said it will take majority and strategic minority stakes in businesses based in the GCC countries.

Ithmar Capital, a Dubai-based private equity firm, has unveiled plans to raise its third and by far its largest fund in the second half of the year. The firm is looking to raise $1 billion (€645 million) for Ithmar Fund III, four times more than its previous fund which closed on $250 million.

The fund will invest in companies based in the GCC region particularly in the construction, oil and gas, healthcare and education sectors, and will follow the same investment strategy as its earlier funds. It will look to take either majority or strategic minority stakes in companies it invests in.

Faisal Belhoul, founder and managing partner of Ithmar Capital, told PEO that Ithmar expects to invest $50 milion to $150 million equity in each transaction, allowing it to commit to businesses with an enterprise value of between $50 million and $1 billion.

He said that limited partners have co-invested alongside Ithmar's previous fund in all its transactions, usually between two to three times more than the fund's investment itself. However, with the third fund which is being raised, there will be fewer contributions from co-investors as the firm looks to invest larger chunks of equity through the fund. Ithmar makes co-investments exclusively with limited partners to provide them with “selective increased exposure to businesses that they are more interested in,” Belhoul said.

The bulk of the new fund will be raised from existing investors, a majority of which are institutional investors from the GCC including the “most prominent sovereign wealth funds and government institutions”, family offices and financial institutions.

Global private equity firm 3i, with whom the firm has a strategic alliance, is also an anchor investor in Ithmar Fund II. Another investor from outside the GCC is “one of the most prominent sovereign wealth funds from Southeast Asia,” Belhoul said, without providing any names.

While Ithmar’s $70 million fund I is fully invested, the $250 million Fund II has made four investments so far, and has another three lined up. Belhoul expects the fund to be over 75 percent deployed in seven deals by the third quarter of the year.