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|29 November, 2018

Local leaders: Arab governments, private equity firms need to support local talent, says Kuwaiti chief investment officer

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Image used for illustrative purpose. Four business people in traditional Emirati clothes in Dubai.

Image used for illustrative purpose. Four business people in traditional Emirati clothes in Dubai.

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Investment funds operating in the Arab region lack local talent, the Chief Private Equity and Direct Investment Officer in Kuwait’s KFH Capital investment company, Mohammad Alhajeri, said, He urged private equity firms and Arab governments to step up efforts to support funds led by local managers.

“The main problem that we have in the region, and I am not trying to be a racist, is that the majority of funds are managed by expats and this is a major problem,” Alhajeri said, speaking to Zawya in Arabic on the sidelines of the Alternative Investment Management Summit (AIM) in Dubai on Monday.

“There is lack of specialised funds, whether private equity or venture capital, (that are) run by or have a local element - and by local element, I am not talking about hiring one person but I am talking about having a local partner,” he added.

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He said that local private equity professionals “bring in knowledge and connections that expats might lack”.

Asked what private equity firms operating in the Arab region and local governments can do to support local talent, Alhajeri said: “They (the firms) have to support local funds and invest in them… You have to give chances for the locals to grow.

“I think the sovereign wealth funds have to see these (locally-led) funds and believe in the talents that run the funds that support the economy,” he added.

In the United Arab Emirates, the Arab region’s business hub, many of the major private equity firms are run by expat talent. Prior to its collapse, the Middle East’s biggest private equity fund, Abraaj Group, was run by Pakistani national, Arif Naqvi.  Meanwhile, the CEO of Abu Dhabi-based Gulf Capital is Karim El Solh from Lebanon.

The Gulf’s private equity industry has shrunk in size since the global financial crisis. In July, the founder of Dubai-based private equity firm Cedar Bridge Capital, Imad Ghandour, told Zawya that there were 103 private equity funds in operation before the 2008 financial crisis, but that number has reduced to “a handful – I mean the fund managers that are active and sustainable”.  US-based Boston Consulting Group said there were 24 active funds in the region with combined target funds of $6.5 billion.

(Reporting by Yasmine Saleh; Editing by Michael Fahy)

(yasmine.saleh@refinitiv.com)

© ZAWYA 2018