Middle East & North Africa

Middle East & North Africa Q1 2018 Insight

After two consecutive years of declining fundraising totals, no MENA-focused funds reported closes in Q1 2018. However, capital invested and the total number of deals completed increased for the third and fourth consecutive quarter, respectively, suggesting that managers in the region may be busier deploying capital than raising it. In particular, investments in North Africa rose from just one in Q3 2017 to seven in Q1 2018, following strong fundraising for the market: AfricInvest Maghreb Private Equity Fund IV and Mediterrania Capital III held first closes at US$167 million and US$123 million, respectively, in 2017. The GPs raising these funds have wasted no time in deploying new capital, completing six deals between them in Q1 2018. The largest disclosed transaction across the region was Mediterrania’s US$67 million investment in Morocco-based contractor Travaux Generaux de Construction de Casablanca. While disclosed capital invested via venture capital (VC) deals was more subdued in Q1 2018 after strong growth in recent years, early-stage financing rounds for Jordan-based mobile game developer Tamatem and Palestine-based education platform Bambinotes point to continued interest in the region’s startups—even those based beyond the regional hub of Dubai.

View all Q1 2018 Data Insights here.

Private Equity in the Middle East & North Africa

Having begun in the late 1990s, the private equity industry in the Middle East and North Africa has a shorter history than most emerging market regions. In its earliest days, the asset class received a significant amount of interest from local—primarily GCC-based— limited partners, which led to a large number of first-time funds raising a sizable amount of capital in a short amount of time. In 2007, more than US$6.2 billion was raised by funds dedicated to investing in the region. However, the party proved to be short-lived; with the onset of the global financial crisis, the asset class nearly disappeared as quickly as it had emerged. By 2009, fundraising had slowed to just over US$700 million, a drop of over 82% from the prior year. Amitava Ghosal, a Partner with Al Masah Capital Limited, notes, “The 2008 global financial crisis was a sobering experience for many firms. The worldwide downturn from 2009 to 2010 resulted in a shakeout of the industry; the most serious players have survived, but many of the small funds have wrapped up their operations and closed shop.”

Download the full report here.

Amendments to Foreign Fund Private Placement Exemptions in the UAE

In August 2016, the Emirates Securities and Commodities Authority (SCA), the federal securities regulator of the United Arab Emirates (UAE), adopted new investment funds regulations (the 2016 Fund Regulations), which repealed the prior funds regulations adopted in 2012 and amended in 2013 (the 2013 Regulations). This clarified the formation process for the establishment of locally domiciled funds and introduced significant changes to the marketing of foreign domiciled investment funds in the UAE. The 2016 Fund Regulations impose substantial hurdles and costs for managers seeking to promote foreign funds in the UAE and have generally been subject to negative feedback.

Download the full article here. 

10 Tips for Private Equity & Venture Capital Transactions in the Middle East

In this article King & Spalding set out some of the common issues faced by parties, particularly PE and VC investors, purchasing Middle East-based companies in the popular healthcare, education and food and beverage sectors with a focus on companies in the Kingdom of Saudi Arabia and the United Arab Emirates (UAE).

Download the full article here.

Navigating Islamic Private Equity: An Interview with Fajr Capital’s Iqbal Khan

Iqbal Khan is the Chief Executive Officer of Fajr Capital, a Dubai-based principal investment firm with a focus on strategic, high-growth sectors across key Organisation of Islamic Cooperation (OIC) markets. Fajr Capital’s shareholders include sovereign investors from Abu Dhabi, Brunei and Malaysia, and private investors from the Gulf and beyond.

In this interview, Mr. Khan provides an overview of the evolution of Islamic private equity, and discusses both what factors distinguish Islamic private equity from conventional private equity and what global investors interested in the growing markets of institutional investors in the OIC world should pay attention to in the coming decade.

Read the full interview here. 

Private Equity in the Maghreb: An Interview with Albert Alsina of Mediterrania Capital Partners

Albert Alsina is the CEO and Managing Partner of Mediterrania Capital Partners, a private equity firm focused on small- and medium-sized enterprises (SMEs) and mid-cap companies in North Africa with total assets under management of more than US$200 million. In this interview, Albert discusses the opportunity set available to private equity investors in North Africa, the role of regional integration in promoting investment, and why global firms are paying increasing attention to these markets.

Read the full interview here.