Report: BNP Paribas launches $300m Middle East fund

BNP Paribas has reportedly launched a $300m fund for investment in small and medium-sized businesses in the MENA region with the dual aims of taking advantage of lower valuations and helping businesses obtain much-needed growth capital.

BNP Paribas Investment Partners has launched a $300 million private equity fund with the aim of investing in nine to 14 small to medium-sized businesses in the Middle East and North Africa, according to a report in Trade Arabia.

The firm's CEO for the MENA region, Tariq al-Sanahiji, reportedly said the fund, which has a cornerstone investment of $75 million from BNP Paribas, would target annual returns of 18 percent to 19 percent and would be invested 70 percent in the Gulf Arab region and 30 percent in North Africa.

He said BNP Paribas aimed to fully invest the fund over the next three to four years and already had 10 possible deals in the pipeline, including “advanced” prospects in Bahrain, Saudi Arabia, Abu Dhabi and Qatar, according to the report.

Explaining the rationale behind the fund, Al-Sanahiji said small and medium-sized businesses in the MENA region had less debt than comparable businesses in other regions. Those businesses traditionally found it hard to obtain growth capital from local banks – a gap the BNP Paribas fund would be able to fill while also providing “management expertise” to portfolio companies, he said.

The BNP Paribas fund would target the health care and education sectors, where there has been a paucity of private equity investment in the region, but would not rule out infrastructure opportunities, the report said.