24 July 2011
This is a truly extraordinary period for the Middle East and North Africa, with a lot of sad events, but also with seeds of great hope for the future. We believe it is the beginning of a new era for the Arab people, despite the turmoil and setbacks we are witnessing, and the formidable challenges that lie ahead. Deep reforms are inevitable and we believe that the Arab economies will emerge stronger with additional political freedom, responsive governments and less corruption and abuse.
What impact will the events have on the private equity industry in the MENA region, and in particular in the Maghreb region?
The financial crisis that rocked the world's markets in 2008 and 2009 was detrimental to fundraising all over the globe, including the MENA. Just as the impact from the financial crisis was fading, however, the MENA region has been hit by the extraordinary popular uprisings, with an even harsher impact than the previous crisis, with mostly development finance institutions still occupying the space, and only a few private investors still considering the region, and usually for small amounts.
Despite the drop in appetite, we are convinced that now is the right time to invest in the Maghreb region, and reap the benefits of a reinforced rule of law, a cleaner and more transparent investment environment, which in turn should lead to higher economic growth down the road. The timing is also right because prices have gone down as stock markets and multiples have retracted.
As PE investments have a medium- to long-term view, we expect higher returns as a result of increased opportunities, freer entrepreneurship and stronger growth. Higher transparency and stronger growth rates should also lead to more active stock markets and a bigger appetite from multinationals for acquisitions in the region, and hence better exit multiples.
The Maghreb Potential
In Tunisia, the dismissal of the dictatorial regime should bring about strong economic rewards thanks to a fair and healthy business environment. In Morocco and Algeria, the respective governments are making the right moves, adopting a proactive approach and moving their countries towards democracy and a more friendly investment environment. Libya remains a major concern, however, and we hope for a satisfactory resolution of the conflict there.
The winds of change could set the stage for real regional integration among the Maghreb countries and a more advanced status with Europe. The political hurdles that have been preventing good economic integration in the Maghreb, and hence costing the region an estimated 2% to 3% of economic growth, are being lifted, and the region is set to reap the benefits.
Anis Fathallah is a Partner at Tuninvest-Africinvest Group, the first private equity fund management company in the Maghreb and one of the leading players in Sub-Saharan Africa. Fathallah participated in the structuring and raising of several investment funds targeting the Maghreb and Sub-Saharan Africa totaling about USD500 million. Between 1992 and 1998 he was head of the Financial Institutions Department at Citibank, Tunis, in charge of a USD300 million portfolio.
This article was contributed to Zawya's monthly private equity insight
Click here to view our monthly newsletter
Zawya 2011
This is a truly extraordinary period for the Middle East and North Africa, with a lot of sad events, but also with seeds of great hope for the future. We believe it is the beginning of a new era for the Arab people, despite the turmoil and setbacks we are witnessing, and the formidable challenges that lie ahead. Deep reforms are inevitable and we believe that the Arab economies will emerge stronger with additional political freedom, responsive governments and less corruption and abuse.
What impact will the events have on the private equity industry in the MENA region, and in particular in the Maghreb region?
The financial crisis that rocked the world's markets in 2008 and 2009 was detrimental to fundraising all over the globe, including the MENA. Just as the impact from the financial crisis was fading, however, the MENA region has been hit by the extraordinary popular uprisings, with an even harsher impact than the previous crisis, with mostly development finance institutions still occupying the space, and only a few private investors still considering the region, and usually for small amounts.
Despite the drop in appetite, we are convinced that now is the right time to invest in the Maghreb region, and reap the benefits of a reinforced rule of law, a cleaner and more transparent investment environment, which in turn should lead to higher economic growth down the road. The timing is also right because prices have gone down as stock markets and multiples have retracted.
As PE investments have a medium- to long-term view, we expect higher returns as a result of increased opportunities, freer entrepreneurship and stronger growth. Higher transparency and stronger growth rates should also lead to more active stock markets and a bigger appetite from multinationals for acquisitions in the region, and hence better exit multiples.
The Maghreb Potential
In Tunisia, the dismissal of the dictatorial regime should bring about strong economic rewards thanks to a fair and healthy business environment. In Morocco and Algeria, the respective governments are making the right moves, adopting a proactive approach and moving their countries towards democracy and a more friendly investment environment. Libya remains a major concern, however, and we hope for a satisfactory resolution of the conflict there.
The winds of change could set the stage for real regional integration among the Maghreb countries and a more advanced status with Europe. The political hurdles that have been preventing good economic integration in the Maghreb, and hence costing the region an estimated 2% to 3% of economic growth, are being lifted, and the region is set to reap the benefits.
Anis Fathallah is a Partner at Tuninvest-Africinvest Group, the first private equity fund management company in the Maghreb and one of the leading players in Sub-Saharan Africa. Fathallah participated in the structuring and raising of several investment funds targeting the Maghreb and Sub-Saharan Africa totaling about USD500 million. Between 1992 and 1998 he was head of the Financial Institutions Department at Citibank, Tunis, in charge of a USD300 million portfolio.
This article was contributed to Zawya's monthly private equity insight
Click here to view our monthly newsletter
Zawya 2011
