Dubai-based investment bank Rasmala Investments has returned over 3 times capital with an IRR of 22 percent from its first private equity fund set up in 2000. The bank declined to say how much the original fund was.
The company revealed last month it had doubled its capital under management from 185 million dirhams ($50 million, €37.7 million) to 370 million dirhams attracting 10 prominent regional investors through a private placement.
Rasmala Investments’ buyout arm targets financial services companies in Gulf Cooperation Council countries. The company also works in investment banking, asset management and brokerage.
Ali al Shihabi, founder and chief executive of Rasmala Investments said his company could be proud of the payout because it came after a prolonged period of tremendous volatility in regional markets and in an asset class that had hardly existed in this region before the launch of the fund.
“The GCC economies are experiencing tremendous growth, the markets are continuing to open up to foreign investment and regulatory reform is progressing,” he added.
Rasmala Investments is planning to launch two more private equity funds by the end of the year and it currently manages eight different funds of various types in the region and globally.
The fund’s returns come after the two largest deals in the Middle East and North Africa region were completed last week. The Abraaj Capital-led consortium’s record breaking buyout of the Egyptian Fertilizers Group for $1.41 billion (€1.05 billion) was dramatically eclipsed by Colony Capital’s $4 billion acquisition of Libyan oil and gas company Tamoil.
Al Shihabi said: “With more funds coming in, the market will be enlarged and the potential to expand the market is immense.” Yet he warned “less imaginative” firms are risking large premiums to buy bigger companies leading to price inflation.
“We walk away from auctions because it is a recipe for overpaying in this part of the world,” he said.