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29 July, 2015

Funds raised through MENA PE, venture capital deals hit 2008 high

Wednesday, Jul 29, 2015

Dubai:

The total funds raised through private equity (PE) or venture capital rose in the Middle East jumped 65 per cent at $1.229 billion in 2014, reaching its highest level since 2008 lead by deals in UAE and Saudi Arabia, industry association said on Wednesday.

UAE and Saudi Arabia attracted over 75 per cent of MENA investment activity by value reflecting their scale and stability and increased availability of larger target assets. The total number of known investment volumes increased to 72 in 2014 compared to 66 in 2013.

“The survey is evidence of a significant development in the industry over the last year with the successful conclusion of a number of large and complex transactions,” said Declan Hayes,Managing Director at Deloitte Corporate Finance Limited.

There was a marginal increase in the number of closes in the year (three funds closed twice in the year) as fund raising in the region continues to be challenging for many market participants due to the limited number of GPs and concerns over geopolitical instability.

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“Private Equity has permanently established itself over the past decade as a mainstay in the regional financial market as it successfully overcame several economic and political crises,” Imad Ghandour, Managing Director at CedarBridge Partners and a member of the Association’s Steering Committee said in a statement.

“It has now several well established players focused on funding and nurturing tens of young companies of all sizes and in all sectors. Its impact on the development of the regional private sector is increasingly being felt as such company blossom into strong regional and global operators, each in their respective field,” Ghandour said.

Outlook strong:

The significant increase in fund raising activity by value in 2014 should provide further impetus for new investments in the coming

years.

The long-term outlook for the region remain strong with the demographic profile, relative economic stability, increasingly developed entrepreneurial outlook and underlying liquidity all supporting the view that the private equity and venture capital industries are poised to continue developing positively across the region, the industry body said.

Fund raising in the region continues to be challenging for many market participants, In part this is due to the limited number of General Partners (GP) with a confirmed track record. This reflects the relative youth of private equity as an asset class in MENA. In addition, concerns

over geopolitical instability may prove a hindrance to

fund raising.

Staff Report

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