Bain Capital managing director Stephen Pagliuca, speaking at PEI’s annual MENA-focused conference in Dubai Wednesday, argued that the region’s relatively low sovereign debt, and almost non-existent consumer debt, have left it well-positioned for future growth.
He contrasted MENA, Russia and China with Western economies like the US and UK, where high levels of sovereign debt would impede growth significantly.
For private equity firms active in the MENA region, he said, this meant a wealth of opportunities to back local businesses and help them grow.
“Economic growth and favourable macro-trends make the MENA region attractive to private equity,” Pagliuca said. “But success will require partnerships with family businesses. The significant amount of capital here that is available for global and local investments will encourage the expansion of private equity activity in the region. The private equity industry will bring with it global management best practices, and will help local businesses to grow,” he added.
Discussion at the conference focused on the impact of the ongoing ‘Arab Spring’, and also a new climate of entrepreneurialism.
Karim Saada, country head of Egypt for private equity group Amwal AlKhaleej, said the changes occurring in Egypt, for example, were throwing up new opportunities. “Things are changing extraordinarily fast – by the hour sometimes – so we’re very much on alert. We’re alert to new investment opportunities. Although activity has been subdued, many firms are doing due diligence at present, and I expect deals to really take off once the Egyptian elections are over and the constitution drafted,” he said.
Panellists highlighted the importance of understanding the region’s often complex regulatory landscapes. “There’s a lot of red tape, so you need to know which advisors to turn to to help you clear it,” said Ahmed Badreldin, senior partner at Abraaj Capital.
Hisham El-Khazindar, co-founder of Citadel Capital, said the investment case for MENA was still a strong one, despite the recent turmoil. “It is a challenging environment but challenge creates opportunity. We have a number of years ahead where there will be high growth. The region’s fundamentals haven’t changed. Together with the energy unleashed by the Arab Spring, it represents a very compelling case for investment.”
On Wednesday, the final day of the conference, discussion will focus on Saudi Arabia. For further details of the conference, please click HERE.