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More private equity funds on the anvil

By A. E. JAMES MUSCAT: The Financial Corporation ( Fincorp ) sponsored private equity fund, which has achieved its first closure at RO12 million, is considering more such funds at a later date, after successfully investing the initial fund.

"Our aim is to create more funds under the new company. We can start a different fund focusing on a separate sector," Munir A. Makki, managing director and president of the Fincorp told Times of Oman, on the sidelines of announcing the official launch of Fincorp Oman Private Equity Fund here yesterday.

Fincorp -sponsored fund, which has a target corpus of RO20 million, is expected to achieve its final closure for raising the remaining portion by the end of this financial year.

Makki also noted that his company is thinking in terms of managing investments of major holding companies as a separate fund.

" Fincorp can create a separate fund for them. We are in a better position to manage (their investments) so that they can focus on their core business," he elaborated.

Fincorp , in accordance with the best practices in the industry is in the process of incorporating a wholly owned subsidiary company -- Fincorp Equity Advisors , a specialised private equity fund management company.

The Fincorp board has designated A. J. V. Jayachander, the chief operating officer of Fincorp as the chief executive of the new company.

Fincorp Oman Private Equity Fund has received overwhelming response from investors, including its anchor investor Oman Investment Fund .

"The other investors are ahli bank , Oman Telecommunications , Qatar Oman Investment and a host of pension funds. They were able to come together to invest in the fund despite adverse circumstances."

Potential sectors
Saying that the fund is exploring opportunities for providing growth capital, Makki noted that it already started evaluating two to three projects for investment.

However, he added that it takes time for taking a final investment decision as the fund has to conduct due diligence, besides evaluating growth potential.

The fund intends to make investments in select companies, mainly located in Oman and selectively in the GCC region with cross border linkages. The potential sectors identified for investment include healthcare, tourism, education, petrochemicals a nd infrastructure.

"The fund intends to review a number of opportunities to secure five to six suitable investments," noted Makki.

The strategy is to identify and structure growth opportunities and actively manage the growth of its investee companies.

Investments will be into mid- to late-stage companies with strong management team, ability to dominate the market, superior earnings growth and new projects or product areas which will add value to the company.

"There is a good opportunity (in view of low valuation in Gulf markets). We can start fishing at the bottom of the cycle. We will identify projects with growth potential and take them to the next level," Jayachander said, adding that private equity funds played an important role in the growth of multinational companies like Facebook.

© Times of Oman 2011