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UBS, MerchantBridge to raise $500m Middle East fund

The Swiss asset manager and the Middle East investment firm are both committing $40m to the fund, which will make investments in oil and gas services, financial services, and light and medium industries.

UBS Global Asset Management and MerchantBridge have formed Dubai-based MerchantBridge-UBS Private Equity, which has launched a $500 million private equity fund to invest in the Middle East's oil and gas services, financial services, and light and medium industries. The two parties will each provide $40 million in the form of anchor investments.

The Middle East is experiencing rapid growth that is supported by sound macroeconomic fundamentals, said Basil Al Rahim, founder and managing partner of MerchantBridge and now also the chief executive of MerchantBridge-UBS Private Equity.

As such, the expansion is “offering important opportunities to invest in private businesses across the region”, he added. He went on to say that many Middle Eastern companies will continue to look for business opportunities both nationally and regionally, and at a time when capital is scarce, private equity will play an important role.

John Fraser, chairman and chief executive of UBS Global Asset Management and of UBS Saudi Arabia, attributed the asset manager’s move into private equity in the region to the “recent success of our infrastructure business”.

MerchantBridge is backed by merchant families from around the GCC region. It is focused on making direct and private equity investments in the Middle East. In July, the firm acted as an arranger for UBS’ move into Saudi Arabia, allowing it to set up UBS Saudi Arabia.

UBS Global Asset management provides traditional, real estate, infrastructure, hedge fund and private equity investment management services. It has invested assets worth about $630 billion as of 30 September 2008.

UBS could not be reached by press time.