Abraaj will be the cornerstone investor in the new Fund
The Fund will invest in SMEs across the MENASA region
Dubai, United Arab Emirates, 20 May, 2015: The Abraaj Group ('Abraaj' or 'The Group'), a leading investor operating in global growth markets, today announced its commitment of US$ 30 million to the Auvest MENASA Opportunities Fund I L.P. (the 'Fund'). Through this investment, Abraaj will take on the role of cornerstone investor in the Fund, which intends to raise between US$ 250-300 million to invest in the small and medium enterprise (SME) sector across the Middle East, North Africa and South Asia (MENASA) region.
The commitment by Abraaj also marks the formal launch of the Fund, which is sponsored and managed entirely by the Auvest Group ('Auvest'). Auvest was founded in 2007 by Humayun Shahryar, who formerly held the role of Executive Director, Board Member and Head of the investment team while working at Abraaj, from inception until early 2006. Most of the members of the Auvest management team have previously worked at Abraaj and Auvest represents the first spin-off from one of the most established regional private equity firms, symbolising the evolution of the MENASA private equity industry.
The SME sector in the MENASA region plays a vital role in creating long-term employment opportunities as it accounts for over 90% of businesses in most MENASA countries. SMEs in the MENASA region provide 45% of employment but only contribute 25% to GDP, implying a low level of productivity, as these firms often lack the financial resources needed to invest in the growth of the business. Private equity can play a dual role in providing capital and helping SMEs with strategic, operational and financial initiatives, resulting in revenue and profitability growth.
While the Fund will be sector agnostic, Auvest has identified attractive industries such as retail, restaurants, logistics, packaging, education and healthcare for their investment potential. These sectors also possess the necessary attributes for the creation of regional champions through organic growth and/or bolt-on acquisitions. The Fund's core target countries will be the United Arab Emirates, India, Egypt, Sri Lanka, Oman and Jordan, given the strong presence of investable SMEs that can provide a base from which expansion can be pursued into other regional markets.
Commenting on the investment, Arif Naqvi, Founder and Group Chief Executive Officer of The Abraaj Group, said, "We are delighted to invest in the Fund and support Auvest's talented and capable management team. We also welcome the opportunity to contribute to the growth of the private equity and SME eco-system in the MENASA region, an objective Abraaj has always proactively supported since its inception."
"It has long been acknowledged that the SME sector in growth markets is a formidable engine of employment and economic diversification. The access to long-term capital will enhance the growth of the sector and allow thriving businesses to take advantage of the underlying opportunity and strong fundamentals of the region."
Humayun Shahryar, Founder and Chief Executive Officer of Auvest Group, added: "A vibrant SME sector is critical to reduce income inequality and enhance business productivity. The lack of access to funding is a key constraint to the growth of SMEs in the region. SMEs often do not have the equity base to support bank lending or the scale required to raise capital from the public markets, leaving private equity as the most viable source of funding. This anchor investment from Abraaj represents a milestone for our new Fund and further validates the exciting investment opportunity that exists in the region and the SME sector in particular."
The Fund has a strong deal pipeline with a number of transactions currently under discussion across various sectors.
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About THE ABRAAJ GROUP
The Abraaj Group ("Abraaj" or "the Group") is a leading private equity investor, purpose-built for operating in the growth markets of Africa, Asia, Latin America, the Middle East, and Turkey.
Employing over 300 people, Abraaj has over 25 offices spread across five regions with hubs in Dubai, Istanbul, Mexico City, Nairobi and Singapore. The Group currently manages c. US$ 9 billion across regional, sector and country-specific Funds.
Abraaj has realized c. US$ 5.1 billion from over 70 full and partial exits, and Funds managed by the Group have made over 140 investments across 10 sectors including consumer, energy, financials, healthcare and utilities. The Group is committed to the highest environmental, stakeholder engagement and corporate governance standards and is a signatory to the United Nations-backed Principles for Responsible Investment and the United Nations Global Compact. Abraaj's founder, Arif Naqvi, was appointed to the United Nations Global Compact Board by UN Secretary-General Ban Ki-moon in 2012 and to the Interpol Foundation Board in 2014.
This publication is issued by Abraaj Capital Limited ("ACLD" or the "Firm"), a member of The Abraaj Group that is authorised and regulated by the Dubai Financial Services Authority ("DFSA"). Several Group members are regulated by a number of international regulatory authorities including the DFSA under whose rules ACLD has issued this publication.
About Auvest Group
The Auvest Group (www.auvest.com) is a principal investor founded in early 2007 offering investment management services to institutions and family offices. Auvest invests in small and medium enterprises in the Middle East, North Africa and South Asia (MENASA) region with a focus on value creation through active ownership.
The management team at Auvest has over 100 years of combined relevant experience including more than 30 years with leading private equity firms in the MENASA region. Team members have participated in numerous successful transactions which include growth capital, minority positions, control transactions and management and leveraged buyouts with exits through trade sales and IPOs.
MENASA is an acronym for a group of 30 countries in the Middle East, North Africa and South Asia. Auvest has selected the United Arab Emirates (UAE), Oman, Bahrain, Kuwait, Qatar, Saudi Arabia, India, Sri Lanka, Pakistan, Egypt, Jordan, Lebanon, Cyprus and Turkey for the purposes of defining MENASA for its Fund and all references and data pertaining to MENASA in this document refer only to these 14 countries.
The data on SMEs presented here has been compiled by Auvest from the following sources: AT Kearney, Asian Development Bank, Lebanon Ministry of Economy & Trade, Oxford Business Group, Central Bank of Oman, World Development Indicators, The World Bank, Standard Chartered Bank, Association of Chartered Certified Accountants, Kosgeb Turk Stat, Arab EU, Economic Times and Kuwait Times.
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Emily Hargreaves, Finsbury
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© Press Release 2015
