gulf venture capital association- private equity in the middle east 2007

A n n u a l R e p o r t2 0 0 7

Private Equity & Venture Capitalin the Middle East

Prime Sponsors:

Associate Sponsors:

A n n u a l R e p o r t2 0 0 7

Private Equity & Venture Capitalin the Middle East

©2008 GVCA & KPMGKPMG, A United Arab Emirates member firm of the KPMG network of independent member firms affiliated with KPMG international, a Swiss cooperative.

All Rights Reserved.KPMG and KPMG logo are registered trademarks of :KPMG international, a Swiss cooperative.

Report Steering CommitteeAshish DavePartner, KPMG

Ihsan JawadCEO, Zawya & Director, GVCA

Imad GhandourExecutive Director, Gulf Capital & Chairman of Information & Statistics Committee, GVCA

Special ThanksSpecial thanks go to all those who contributed their time and effort to make this report possible, and include:

Gulf Capital: Imad Ghandour

KPMG Team: Ashish Dave, Dale Gregory, Meera Kohli, Muhammad Salman and Krishna Dhanak

Zawya Team: Ihsan Jawad, Yasmina Chraibi, Jeanette Lepper, Ali Arab and Jad Hawili

Euro RSCG Bahrain Team: Talal Al Madani, Mahmood Ali and Charlotte Calixto

We would also like to thank all the sponsors for their support, and all the survey participants.

Table of Contents

Foreword By His Excellency Amr Al-Dabbagh, Governor of SAGIA

1 Important notice 1.1 Basis of preparation 1.2 Definitions and assumptions 1.3 Data filtering

2 GVCA introductory message 3 KPMG introductory message 4 Private equity in the MENA region 4.1 Overview 4.2 Fund profile over the last decade 4.3 Nature and size of investments 4.4 Percentage of funds deployed 4.5 Focus of investments 4.6 Rumoured funds 4.7 Return on investments

5 Emerging trends of private equity in MENA in 2007 5.1 Analysis of funds and investments in 2007 5.2 Implications for the future

6 Sovereign Wealth Funds 6.1 Introduction 6.2 Key trends 6.3 Exits 6.4 What’s next for SWFs?

7 Survey on the impact of Private Equity and Venture Capital on the development of Private Equity backed companies 7.1 Introduction 7.2 Background 7.3 Highlights 7.4 Survey results

8 GVCA - Gulf Venture Capital Association 8.1 GVCA Overview 8.2 Board Members 8.3 Member’s Directory

9 Directory of Private Equity firms in MENA

10 Sponsors’ Profiles

6

101011

14

15

18212324273131

3846

50515455

58585960

666768

73

81

Foreword

By His Excellency Amr Al-Dabbagh,Governor of SAGIA

Foreword

By His Excellency Amr Al-Dabbagh,Governor of SAGIA

The MENA region is going to be a different region for doing business in the 21st century. The private sector in general, and private equity in particular, will have enormous investment opportunities of a scale never seen before. The trend to make Arab economies more competitive is irreversible, and the economic policies adopted by most Arab governments will sustain today’s growth into the future.

Take Saudi Arabia as an example. In 2007 the World Bank’s Doing Business Report ranked Saudi Arabia number one in the entire Middle-East and Arab world and twenty third globally for Ease of Doing Business. In 2006 we were ranked thirty eight globally and in 2005 sixty seven. This increase in rankings results from the national 10x10 objective endorsed by the Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz. The goal is to see Saudi Arabia among the top ten most competitive nations globally by 2010. This has also contributed to a corresponding increase in the value of investment licenses issued by the Saudi Arabian General Investment Authority (SAGIA). From 2004 to 2005 the value of investment licenses jumped thirty-fold to SR 200 billion, and from 2005 to 2006 it jumped again 25% to SR 253 billion, and from 2006 to 2007 it rose to SR 334 billion. In 2007 UNCTAD ranked the Kingdom number one in the Middle East and Arab world for attracting FDI and twentieth globally. Last year Saudi Arabia attracted USD 18 billion dollars in FDI and USD 73 billion in DDI for a total of USD 91 billion.

To help us achieve our 10x10 objective, in 2005 we launched a new global product called Economic Cities. Each of the eventual six cities will be developed by the private sector and serve as models of global competitiveness. Each will house beyond best practices and infrastructure in every possible domain, including regulatory environment, legislation, environment and sustainability, service provision, and life style. Total contribution to the Saudi GDP by 2020 will be USD 150 billion, and GDP per capita will grow from USD 13,500 to USD 33,500 within the Economic Cities.

Regional private equity players are in a unique position to benefit from this unprecedented growth. The information presented in this report will likely support this claim in almost every aspect, and give investors a glimpse into the future of the region.

1 Important Notice

1.1 Basis of Preparation1.2 Definitions and Assumptions

1.3 Data Filtering

10

1.1 Basis of Preparation

This report has been prepared based on data provided by GVCA, sourced from the Zawya Private Equity Monitor.

Historic data has been updated from that used in the 2006 GVCA report to include full year results for 2006 and to reflect increased disclosure of information in the market.

KPMG has not initiated any primary research in relation to this report and has not sought to establish or confirm the reliability of the data provided by GVCA and Zawya.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

In analysing and determining the parameters of available data, it has been necessary to apply certain criteria, the most significant of which are as follows:

• Private equity has been defined to include houses that have a General Partner / Limited Partner structure, investment companies and quasi-governmental entities that are run by, and operate in the same way as, a private equity house.

• Funds managed from MENA but whose focus is to invest solely outside the region are excluded from the fundraising totals.

• Investments made outside of the MENA region have been included in the data to the extent that the fund manager itself has some focus in the region.

• Investment size represents the total investment size i.e. it includes both the debt and equity portions in the investment.

• The fund raising total is the amounts raised on first / second closes (for fund raising funds), closed funds, investing funds, fully vested funds and liquidated funds.

• With regard to funds, the year has been defined as the vintage year which is assumed to be the date of the first official close of the fund (or if unknown the final closing date of the fund).

• Given the relatively infant state of the industry in MENA, exits have been defined to include partial exits, although simple dilutions have not been included.

• Investments in infrastructure have been included but real estate has been excluded.

1 Important Notice

Private Equity and Venture Capital in the Middle East 2007

11

1.2 Definitions and Assumptions

For the purposes of the analysis of funds, we have considered the following types of funds as defined by Zawya’s Private Equity monitor:

• Announced: Official launch of funds which have yet to commence fund raising.

• Rumored: Funds expected to announce their intention to commence fund raising.

• Fund raising: Funds which have been announced and which are in the process of raising capital.

• Investing: Funds which have closed (raised funds) and are actively seeking and/or making investments.

• Fully vested: Funds that have invested all capital raised. Some of the investments may have divested in this stage but not all.

• Liquidation: Funds which have divested all investments as well as fulfilled all obligations to its shareholders

1.3 Data Filtering

The primary data sourced from Zawya has been filtered according to the definitions used in the Emerging Markets Private Equity Association (EMPEA) research methodology.

In particular we have used the following definitions:

Fund Size: In the case of funds yet to make a first close, fund size is equivalent to the target amount, and is noted as such. For funds achieving at least one official close, fund size is reported as the capital raised to date, while for funds that have made a final close, the fund size is the total capital raised. All amounts are reported as USD millions. Rumoured funds are excluded.

Funds of funds or secondaries are excluded.

Region: Statistics are based on the ‘market’ approach and categorizes funds based on the intended destination for investments (as defined in the fund’s announced mandate) as opposed to where the private equity (PE) firm is located.

Focus: Conventional infrastructure funds, for example funds investing directly in Greenfield infrastructure projects, are excluded from the fundraising statistics. However, funds that make PE investments in companies operating in the infrastructure sector are included in fundraising totals. Real estate funds are excluded.

EMPEA does not track or report other alternative asset classes, including hedge funds, real estate funds and conventional infrastructure funds. In our analysis we have excluded data from investment-type companies and real estate firms, while also separating Sovereign Wealth Funds (SWFs) from the private equity funds. SWF investments have been analysed separately.

1 Important Notice

GVCA and KPMG Introductory Messages

14

The sub-prime problem is now snowballing into a global recession. Banks are hesitant to even lend to each other. Central bankers are panicking. Yet the prospects for private equity in the Middle East and North Africa (MENA) region remain bright, despite increasing challenges.

The next few months will be difficult for all financial players, including private equity companies operating in MENA. However, economic fundamentals remain strong and are supported by aggressive fiscal policies and high oil prices. Governments’ reserves will continue to trickle down to the rest of the economy – sustaining corporate profits and public investments. A sober market will offer better valuations, and hence better returns for private equity. Although the increased attention the region enjoyed in 2007 may be disrupted, we expect such disruption to be temporary. In fact, the robust economic performance of the region is likely to attract additional interest from international institutional investors over the medium term.

This document reports another remarkable year for private equity in MENA. The billion dollar deal milestone was surpassed for the first time with the Egyptian Fertilizers Company deal. Capital raising for existing funds remained strong, but newcomers found it harder to raise money, which is a sign of maturity in the industry. Exits, once a mirage, are becoming more common with 19 reported in 2007, up from 6 in 2005.

The 2006 report has established itself as a benchmark for the industry and I have been pleased to see it frequently quoted in conferences and articles. However, we aim to reach further with each edition. In this issue, we have implemented the Emerging Market Private Equity Association (EMPEA) standards for data collection and presentation. We have also included thought-provoking pieces from regional and international industry leaders to highlight the latest challenges and topics facing Private Equity in the Middle East and North Africa.

Finally, a note of thanks to our sponsors (many of which are repeat sponsors from last year) and to the KPMG and Zawya teams who worked diligently over the last two months to complete this report.

2 GVCA introductory message

Abdullah Al SubyaniPresidentGulf Venture Capital Association

Imad Ghandour Chairman Information & Statistics Committee Gulf Venture Capital Association

Ihsan JawadDirector Information & Statistics Committee Gulf Venture Capital Association


15

KPMG is pleased to continue its association with the GVCA’s annual report on private equity in the MENA region in what has been another fascinating 12 months.

The last year has seen a number of large and high profile global transactions by MENA private equity. In light of the US credit crunch and the reputation issues faced by private equity funds in Europe, the United States and the United Kingdom, outbound investments into these markets by MENA-based funds have gained even greater publicity.

The increasing global profile of private equity players in MENA means they themselves must understand the key factors that exist in the region in order to be able to communicate successfully with stakeholders worldwide. These include industry trends, investment strategies being adopted and the issues, challenges and opportunities faced in the private equity arena.

MENA private equity funds continue to extend their global reach in three main areas: raising funds, deploying funds and recruiting talent to manage funds. In order to do this successfully, general partners must show they belong on the global stage, based on a credible and transparent track record and history of best practice.

If this report, and successive annual reports, can assist in demonstrating to a global audience that there is real substance, structure and professionalism behind the stories of liquidity and petrodollars looking for a home, then this can only benefit the region’s private equity houses and their investors.

Ashish DavePartner, Head of Private Equity, Middle East and South AsiaTel: +971 4 403 0300; e-Mail: [email protected]

KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 148 countries and have more than 113,000 professionals working in member firms around the world.

KPMG’s presence in the Lower Gulf dates from 1973. With close to 700 professional staff, we operate from offices in Dubai, Abu Dhabi, Sharjah and Muscat. We also work closely with our colleagues in offices throughout the region and across the world.

3 KPMG introductory message

GVCA and KPMG Introductory Messages

4 Private Equity in the MENA Region

4.1 Overview 4.2 Fund profiles over the last decade 4.3 Nature and size of investments 4.4 Percentage of funds deployed 4.5 Focus of investments 4.6 Rumoured funds 4.7 Return on investments

18

4.1 Overview

The stellar growth in private equity since 2005 has continued unabated into 2007, with the wealth created from oil spreading further inside the GCC and into MENA. Improving investment conditions, increased liquidity, and mounting international interest in these emerging markets have ameliorated the attractiveness of private equity as a viable regional asset class.

While foreign direct investment continues to flow into the region, a greater share of GCC funds is being invested locally as a result of increasing liberalisation, privatisation and regional integration. This is attracting capital that would have otherwise been invested elsewhere.

The expanding private equity sector offers a promising new vehicle for fund raising as family owned businesses begin to come to terms with selling interests in their companies as well as the benefits of attracting external investors. These benefits include the implementation of proper corporate governance frameworks, synergies from restructuring and access to management talent that is scarce in the region.

There was a significant amount of transactional activity in the MENA region, despite the sub-prime crisis of 2007. Strong and sustainable economic growth, limited reliance on leverage, and limited exposure to the global credit markets have kept MENA region relatively outside the economic turbulences evolving in other regions.

Yet, the number of challenges to private equity players is mounting. One key challenge in the coming years is to sustain the deployment of funds in quality deals. Another challenge is to develop exits and realize returns. Regulatory structures and improving the legal framework in the region are further challenges for this emerging industry.

4 Private equity in the MENA region –buoyant oil prices driving continued economic growth


Thought Leadership


While the recent sub-prime meltdown has led to a slowdown in private equity investment in the US and Europe and a surprising 21 per cent decline in PE investment in Asia (excluding South Asia), the Middle East, North Africa, South Asia (MENASA) region recorded a phenomenal 90 per cent growth in PE investment in 2007. With PE investment of over USD 17 billion, the MENASA region has finally reached a critical mass and many experts in the industry believe that it will emerge as the world’s fourth centre of PE.

The MENASA region is currently undergoing an unprecedented socio-demographic shift wherein the local population of 1.8 billion people, which also happens to be one of the youngest in the world, is tapping into increasing wealth on the back of record-high oil prices. At the same time, despite mega oil revenues and current account surpluses, governments in the region are encouraging Foreign Direct Investment (FDI) by speeding up liberalisation and privatisation efforts in an attempt to create world-class companies.

The IPO of DP World and the planned floatation of Emirates are two examples of such initiatives. Ultimately, the goal of these governments is to diversify their economies away from one source of revenue and to ensure there is sustainable job creation and opportunity for the region’s burgeoning population. PE investors, which seek out high-potential companies, align their interests with management and provide these companies with the necessary capital, operational expertise and best practice corporate governance to fuel their growth, are well positioned to participate in the economic paradigm shift that is transforming the region. Although PE has entered a new era in the region, there still remains tremendous opportunity for growth. In comparison to more developed markets such as the US, where PE funds under management are six per cent of GDP, private equity funds in the MENASA region are still comparatively low at less than two per cent of GDP. But with the positive underlying fundamentals outlined above, the untapped nature of the regional PE market has started to attract both international PE firms as well as local heavy-weights. This increase in competition will be positive, even for existing local PE firms, because it will serve to attract the talent necessary to support the industry’s growth. Ultimately, however, the real beneficiaries of the local PE industry will be the region’s broader business community.

19

Executive Director, and Divia Srinavasan, Abraaj Capital

The Fourth Centre of Private Equity

Frederic Sicre,


Thought Leadership

The family, with its associated networks, is the central element of business in the Gulf Cooperation Council (GCC) and has retained its traditional importance, despite rapid growth and modernisation across the region. Perhaps more than anywhere else in the world, business in the Gulf is a question of personal fulfilment, providing a means to enhance a family’s social standing, rather than a purely wealth-generating, market-driven activity.

In a sense, investors in both the GCC and the global markets have no choice but to engage with family firms. Family-run businesses – defined as firms of which a single family controls the ownership, at least through control of the board and usually also through involvement in senior management – are dominant worldwide. For example, in the United States, family-controlled businesses represent 35 per cent of the Fortune 500 List, generate 50 per cent of GDP, and account for 60 per cent of the country’s employment and 78 per cent of new job creation.

Within the GCC these figures are even more strongly weighted, with over 90 per cent of all commercial activity and non-oil-related GDP in the region estimated to be controlled by family firms. These firms number over 5,000, hold combined assets of more than USD 500 billion, and employ 70 per cent of the workforce.

Private equity has already been the foundation for success the world over. Family businesses in Europe partnering with private equity firms increased their exposure to new markets by 60 per cent, with two-thirds also out-performing the competition. The average value of private equity-backed businesses doubles at the point of exit after an average ownership period of just three and a half years.

Family business owners should be mindful that despite the popular perception of private equity as synonymous with short-term cost-cutting, the bulk of growth in private equity-owned firms in fact derives from organic revenue growth and acquisitions. Employment levels remained the same, or even higher, at exit versus entry in 80 per cent of US deals and 60 per cent of European deals.

Owners must recognise that private equity can offer unparalleled experience in addressing capital restructuring, market repositioning, management optimisation and governance needs. Private equity also enables the definitive separation of business ownership from business management and the development of family firms into institutions, rather than ‘one-man shows’.

At the same time, private equity investors must differentiate their expertise and clearly demonstrate their value, while always remaining sensitive to the regional business culture. There is a learning curve in operation for all parties, and the focus on value creation must become a constant one for families and investors.

The ongoing intersection of family businesses and private equity in the GCC presents a unique opportunity for both parties. If partnerships between private equity firms and family businesses in the GCC can successfully create an environment in which managers can act as owners and owners no longer need to act as managers, then all parties can confidently look to a truly competitive future.

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Managing Partner, Ithmar Capital

The Impact of Private Equity on GCC Family Businesses

Faisal Belhoul,


21

4.2 Fund profile over the last decade

The last three years have seen a boost in the fund raising activity in the region. The number of funds raising capital has more than doubled in this period, with 22 funds reaching at least the first close in 2007, compared to 16 in 2006 and 12 the year before that.

In addition, the average fund size raised in 2007 was USD 274 million, while in 2005 this figure was USD 204 million.

Total funds raised in 2007 totalled USD 6 billion, compared to the 2005 total of USD 2.4 billion. Of the 22 funds raising capital in 2007, 14 were announced in 2006 and 6 in 2007 (2 in 2005).

The time for making a close has elongated since 2005. In 2005, it took 3 to 9 months to make a first close. However, by 2007, it took typically 6 to 18 months to make a first close, but such a time frame is typical in other regions.

Private Equity Funds Closed over the Last Decade

Source: Zawya Private Equity Monitor


Private Equity fun ds closed over the last decade

3 3

-

6

3 3

6

2

12

16

22

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

F und vintage year

-

5

10

15

20

25

F unds rais ed to date N umber o f funds rais ed to date

USD

Mill

ion

22

The cumulative funds raised over the last three years has increased more than threefold from USD 4.7 billion funds raised cumulatively up to 2005 to USD 13.4 billion up to 2007. However, total assets under management as a percentage of total funds (announced and closed) marginally decreased from 68 per cent in 2006 to 58 per cent in 2007. This was primarily because of larger size funds announced in 2007 for which a large proportion has not yet started the fund raising activity.


Private Equity Funds (Cumulatively) Over the Last DecadePrivate Equity fun ds (cum ulatively ) over the last decade

4,650

7,346

13,364

38

54

76

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2005 2006 2007

-

10

20

30

40

50

60

70

80

A s s ets under management N umber o f funds rais ed to date

USD

Mill

ion


T op 5 closed funds in 2007

Y ear announced

S tatus Fund M anager Inves tment Focus R egion Announced amount

Amount rais ed

2006 Inves ting Infras tructure & Growth Capital Fund Abraaj Capital Infras tructure M E NAS A / Turkey 2,000 2,000

2005 Inves ting S wicorp J ous s our Fund S wicorp Financial Advis ory S ervices Oil and Gas & E nergy M E NAS A / GCC 1,000 712

2007 Fund R ais ing with clos e Gulf Opportunity Fund I Inves tcorp B ank B alanced GCC 1,000 650

2007 Fund R ais ing with clos e Global B uyout Fund L.P. Global Inves tment Hous e B uyouts M E NA 1,500 500

2006 Inves ting M E NA Infras tructure Fund Dubai International Capital and HS B C Infras tructure M E NA 500 300


23

4.3 Nature and size of investments

Information limitations

The region’s relative lack of market maturity, together with the mega growth of its private equity industry, has resulted in a number of PE investments being unreported. Market experts estimate an average of around 10 to 30 per cent of PE investments remains unannounced.

Furthermore, some PE houses have not revealed the size of their PE investments, casting further limitations on the information available. Approximately 14 per cent of the total number of PE investments (included in our analysis) in the last decade did not publicly disclose their size.In the absence of comprehensive information on the financing structures used by the PE houses for funding investments, we are unable to analyse and comment on the financing strategies used for structuring PE investments between equity and debt.

Note: Number of transactions includes 29 transactions for which the transaction size is not available

Total PE investments in the MENA region have increased by a compound annual growth rate (CAGR) of 107 per cent since 1998. A staggering 92 per cent of the total investments in the last decade were carried out from 2005 onwards, with 54 per cent taking place in 2007 alone.

PE Investments between 1998 & 2007



USD

Mill

ion

PE Inves tments betw een 1998 & 2007

2 3 1 0

6

1716

56 50

62

-

1,000

2,000

3,000

4,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

0

10

20

30

40

50

60

70

S ize o f P E inves tment N umber o f trans ac tio ns


5 Largest PE investm ents in 2007

PE Hous e/ fund name N ame of the target entity Country T arget s ector Inves tments s ize (U S D million)

Abraaj B uyout Fund II E gyptian Fertilizers Company E gypt B as ic M aterials 1,410 Abraaj B uyout Fund II S audi Tadawi Company S audi Arabia Healthcare 177 S wicorp J ous s our Fund E as tern Petrochemical Company S audi Arabia Oil and Gas 175 Infras tructure and Growth Capital Fund Acibadem S aglik Hizmetleri and Ticaret Turkey Healthcare 163 Global B uyout Fund L.P Fon Finans al Kiralam A.S . Turkey Financial S ervices 120

24

The majority of private equity investments in the last decade (66 per cent) were less than USD 20 million in size, while 28 per cent of investments were made in the USD 21 million to USD 100 million bracket. Only 11 of the total 184 PE investments during the past decade have been over the USD 100 million mark.

However, in recent years it appears that larger investments are now driving the activity, with the USD 1 billion threshold being broken in 2007. Two investments have crossed the USD 500 million mark. Abraaj Capital executed these investments (Egyptian Fertilizers Company for USD 1.4 billion in 2007 and Egyptian Financial Group (EFG) Hermes Holding Company for USD 501 million in 2006).

4.4 Percentage of funds deployed

Historically, in the MENA region, funds are raised before the opportunities to invest are found, and it is inevitable and expected that at such an early stage in the development of this market one would expect some capital overhang.

However, privatisation and re-engineering of family businesses has resulted in an increase in investment opportunities. The number of funds actively raising capital declined in 2007, while the number of investment opportunities soared, so the capital overhang is beginning to narrow.

Size of PE Investments in the Last Decade


S iz e of PE Inves tments in the las t decade

122

119

51

-

500

1,000

1,500

2,000

2,500

1 to 2 0 million 2 1 to 10 0 million 10 1 to 50 0 million 50 1 to 1 billion M ore than 1 billion 0

20

40

60

80

100

120

140

S ize o f P E inves tments N umber o f trans ac tio ns

USD

Mill

ion


25

Deployment rate of some large funds

Note: Transactions for Infrastructure and Growth Capital Fund include the joint USD 1.4 billion acquisition (Egyptian Fertilizer Company in 2007) made by Abraaj through its infrastructure and Growth Capital Fund and the Abraaj Buyout Fund II. Abraaj has not disclosed the split between the two.

Announced funds to be raised

Note: Funds announced and to be raised are based on the year in which they were announced and represent those funds still to reach a first close.



Private Equity fun ds ex pected to be ra ised - by A n n oun ced y ear

7

15

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2006 2007

-

2

4

6

8

10

12

14

16

18

F unds to be rais ed N umber o f funds to be rais ed

Private Equity Funds Expected to be Raised - by Announced Year


USD

Mill

ion

Deploym ent rate by top funds

V intage year

Y ear announced

Fund M anager Inves tment Focus R egion Announced value

Actual rais ed

T rans action s ize

N umber of trans actions

2007 2006 Infras tructure & Growth Capital Fund Abraaj Capital Infras tructure M E NAS A / Turkey 2,000 2,000 1,785 4

2007 2005 S wicorp J ous s our Fund S wicorp Financial Advis ory S ervices Oil and Gas & E nergy M E NAS A / GCC 1,000 712 277 3

2005 2005 The Pre-IPO Fund Global Inves tment Hous e B uyouts GCC 550 550 190 23

2005 2005 Abraaj B uyout Fund II Abraaj Capital B uyouts M E NAS A 500 500 933 5

2006 2006 Global Opportunis tic Fund II Global Inves tment Hous e Pre-IPO M E NAS A / China / Turkey 1,000 500 225 10

2007 2007 Global B uyout Fund L.P. Global Inves tment Hous e B uyouts M E NA 1,500 500 251 3

2006 2006 Gulf Capital Gulf Capital B uyouts M E NA / GCC 330 330 260 6

2005 2004 Amwal Fund I Amwal Al Khaleej B uyouts M E NA 267 267 228 11

2007 2007 Amwal Fund II Amwal Al Khaleej B uyouts M E NA 267 267 150 7

26

There is an increasing number of funds that are taking a prolonged time to raise their capital. Of the total funds announced in the last two years a total of USD 6.6 billion is still to reach a close since 2006 and USD 3.2 billion since 2007. The number of funds announced but yet to reach a close declined from 15 in 2006 to 7 in 2007.

This was primarily on account of a worldwide focusing fund, namely “DIB / DPW Family of Funds” announced in 2006 with an anticipated value of USD 3 billion. Since 2006, the fund has been in the fundraising stage, and details of reaching a first close remain unavailable.

The region is attempting to raise larger funds. The top five funds announced in 2007 represented 70 per cent of the total value of all funds announced that year (compared to 60 per cent in 2006).

As the industry matures and consolidates, some of the funds announced, mainly by new fund managers, will never reach successful closure. Industry experts doubt that some of the mega fund announcements in 2006 and 2007 will ever come to fruition.


Funds announced in 2007 greater than U S D 0.5 billion

Fund M anager Inves tment Focus

R egion Announced value

Actual rais ed

Global B uyout Fund L.P. Global Inves tment Hous e B uyouts M E NA 1,500 500

Gulf Opportunity Fund I Inves tcorp B ank B alanced GCC 1,000 650

E M P E nergy Fund E merging M arkets Partners hip (B ahrain) E nergy M E NA 1,000 N.A

The Carlyle Group M E NA Fund The Carlyle Group B uyouts M E NA 750 N.A

Aldar Private E quity Fund Ithmaar B ank B alanced M E NAS A 500 200

NB D S ana Capital S ana Capital B uyouts M E NAS A, Turkey 500 N.A


27

4.5 Focus of investments

Egypt has emerged as the preferred destination for investment in the MENA region, with USD 2.3 billion being invested in the last decade. The higher level of investments in the past 10 years is mainly due to two investments of more than USD 500 million each, carried out in 2006 and 2007 by Abraaj Capital which accounted for 82 per cent of the total Egyptian investments.

Geographical Split of PE Investments in the Last Decade



G eographical s plit of PE Inves tments in the las t decade

E gypt 37%

UA E 19%

S audi A rabia 15%

J o rdan 6%

B ahrain 2%

Others 21%

Thought Leadership

As the pace of business in the Middle East and North Africa accelerates, family businesses are looking to raise funds, sell out, restructure or offload non-core assets. Deregulation is opening new opportunities for green field investment. Governments are increasingly willing to divest assets in privatisation sales. The list goes on.

Going forward, this means a growing number of private equity deals will originate from situations in which trust, transparency and good corporate governance are vital. As origination streams diversify beyond the usual sources, savvy industry players will embrace the reality that the full alignment of the interests of all parties is becoming the key to sustainable growth.

This list of concerned parties is much longer than the traditional relationship of a private equity firm to a portfolio company. To drive growth, we must instead take into consideration the interests of the firms, their limited partners, portfolio companies, employees, communities and even the economies in which PE firms do business. In this scenario, the full alignment of interests makes the difference between being a good firm and a truly great one.

Good private equity firms accommodate and guard the interests of their limited partners. Great private equity firms align their interests with those of their limited partners by co-investing significant sums alongside them, sharing equally in risks and returns.

Good private equity firms ensure portfolio companies have viable business plans and keep a watchful eye on performance. Great private equity firms help talented portfolio company management teams develop blueprints that align the companies’ operational and strategic plans.

Good private equity firms benchmark compensation packages at the firm and at portfolio companies against others in the industry. Great private equity firms build compensation packages at both levels that include stock options and employee stock ownership programs, thereby ensuring staff and corporate interests are fully aligned proportional to their contributions to value creation.

Good private equity firms ensure they meet minimum standards of good governance. Great private equity firms separate management from board-level functions, thereby ensuring everyone’s interests are aligned, in harmony and protected.

Good private equity firms understand that corporate social responsibility programs are an expected part of doing business. Great private equity firms align their giving with the community’s real needs, seeing community development initiatives as a way to make positive contributions to the environments in which they do business.

And, finally, good private equity firms work to manage relations with government ministries and agencies. Great private equity firms, on the other hand, go a step further, treating governments as true partners with a shared interest in promoting economic growth and development — creating value for citizens, the state and companies alike.

28

Chairman and Co-founder, Citadel Capital

Fully Aligned for Growth

Dr. Ahmed Heikal,


29

Note: the above chart excludes the following investments: i Abraaj Capital’s investment in Egyptian Financial Group Hermes Holding Company in 2006 (USD 501 million)ii Abraaj Capital’s investment in Egyptian Fertilizers Company (Egypt) in 2007 (USD 1.4 billion)

Once these two significant investments are excluded from the analysis, the geographic split shows a considerable amount of investments in the UAE (27 per cent) and Saudi Arabia (22 per cent), and modest totals in Jordan and Egypt; with a combined USD 0.8 billion being deployed into these countries in the past decade.

In 2007, private equity investment in Saudi Arabia reached USD 568 million, compared to USD 423 million for all investments from 1998 to 2006 combined. This was mainly due to the economic liberalization policies adopted by the Saudi government and reflected by the Saudi Arabian General Investment Authority (SAGIA) 2010 plan.

Geographical Split of PE Investments in the Last Decade(Excluding 2 investments of over USD 500 Million)



G eographical s plit of PE Inves tments in the las t decade (excluding 2 trans actions of over U S D 500 million)

UA E 27%

S audi A rabia 22%

J o rdan 9%

E gypt 9%

B ahrain 3%

Others 30%

30

Investments in the last decade have been in the Basic Materials sector (23 per cent of all investments) followed by Financial Services (16 per cent) and Oil and Gas (10 per cent) sectors. The data has been influenced by a small number of large transactions (the two largest investments in the last decade, which were each worth more than USD 500 million, were both made in these sectors).

Note: the above chart excludes the following investments: i Abraaj Capital’s investment in Egyptian Financial Group Hermes Holding Company in 2006 (USD 501 million)ii Abraaj Capital’s investment in Egyptian Fertilizers Company (Egypt) in 2007 (USD 1.4 billion)

Sector Focus of PE Investments in the Last Decade

Sector Focus of PE Investments in the Last Decade(Excluding 2 investments of over USD 500 Million)



S ector focus of PE inves tments in the las t decade

Oil and G as10%

B as ic materials 23%

F inanc ial S ervic es16%

T rans po rt11%

H ealthc are9%

C o ns truc tio n7%

C o ns umer G o o ds 7%

Others 17%

S ector focus of PE inves tments in the las t decade (excluding 2 trans actions of over U S D 500 million)

T rans po rt15%

H ealthc are11%

Oil and G as13%


C o ns truc tio n10%

C o ns umer G o o ds 9%

P o wer and Utilities 8%

Others 24%


31

Once the distorting effect of the two biggest transactions in the last decade is excluded from the analysis, a different trend emerges with the sector focus transforming to almost an even distribution to Transport, Healthcare, Oil and Gas, Financial Services, Construction, and other economic sectors. The distribution of investments accentuates the fact that growth in MENA – and particularly in the GCC – is across all economic sectors at this early stage in the economic cycle.

4.6 Rumoured funds The following rumoured funds have been excluded for the purpose of our analysis (in accordance with filtering the data per EMPEA standards):

4.7 Return on investments

Over the past 10 years, PE houses have invested an estimated USD 12 billion against which a mere USD 0.9 billion (measured at cost and representing 7.7 per cent of the total PE investments) have been realised by means of exits. In the last decade, a total of 49 PE investments have been sold (including partial exits) of which 36 were in 2006 and 2007. However, it is worth noting not all exits are reported in the public domain by PE houses.

Note: Sales consideration represents exit price



Y ear Fund Investm ent Focus R egion U S D m illions

2006 E volvance Private E quity GCC Fund Others GCC 500 2006 NCB Private E quity Fund B uyouts GCC 300 2006 E FG-Hermes Oil & Gas Fund B uyouts E gypt 100 2007 IT Ventures II Venture Capital E gypt 100 2007 GCC E nergy Fund II B uyouts GCC 300 2007 TNI venture capital fund Venture Capital GCC 100

1,400

Exits by PE Houses Between 2005 & 2007


E xits by PE hous es during 2005 & 2007

19

17

6

-

500

1,000

1,500

2,000

2005 2006 2007

S ale c o ns ideratio n N umber o f trans ac tio ns

USD

Mill

ion

32

As the PE market is fairly young and most funds are still in the deployment stage, it is not unexpected that only a few exits have been realized by this stage. It is expected that the rate of exits is maintained in 2008 as investments made in 2004-2006 reach realization.

In exits to date, the holding period appears to vary from one to four years, with an average of just over two years. Many investments are reaching realization faster than the planned typical investment horizon of three to five years. The coming few years will reveal if such exits have been realized too soon, and whether better opportunities were found for deploying cash elsewhere.

Recent trends indicate that the most notable sector for the exits of PE investments in the region has been the Financial Services sector, which has been driven by one of the most prominent exits in 2007. This was Abraaj Capital’s sale of its stake in the EFG Hermes Holding for USD 1.1 billion, which alone makes up around 57 per cent of the total exit value to date.


E xi ts b y PE hous es duri ng 2 007

PE hous e Fund name T arget Hol di ng p eri od (i n years )

Purchas e p ri ce (U S D mi l l i on)

S al e p ri ce (U S D mi l l i on)

I RR on exi t

Abraaj B uyout Fund II E gyptian Financial Group Herm es Holding Com pany 1 5 01.0 1,100.0 Info not available

Abraaj B uyout Fund L.P . S eptech E m irates 3 12.8 Info not dis c los ed 3 9 %

Abraaj B uyout Fund L.P . Am wal 4 1.5 Info not dis c los ed 101%

Abraaj B uyout Fund L.P . Maktoob Group 2 5 .2 Info not dis c los ed 75 %

Abraaj Real E s tate Fund Arabtec Holding 3 11.4 Info not dis c los ed 116 %

Global O pportunis tic Fund II Reliance Petroleum Lim ited 1 3 2.6 48 .0 100%

Global O pportunis tic Fund II Zhaojin Mining Indus try Com pany Lim ited 1 8 .1 11.0 3 4%

Global O pportunis tic Fund II Pars vnath Developers 1 0.7 0.9 5 2%

Global O pportunis tic Fund II Dubai Financial Market 1 0.1 0.3 3 48 %

The Pre-IPO Fund Dubai Financial Market 2 0.2 0.3 Info not available

The Pre-IPO Fund Gulf Navigation Holding 2 5 .4 10.2 Info not available

The Pre-IPO Fund Com bined Group Com pany for Trading & Contracting 2 3 .9 5 .2 Info not available

The Pre-IPO Fund Tam weel 2 1.7 3 .6 Info not available

Injazat Technology Fund Atos O rigin Middle E as t 1 Info not available Info not dis c los ed 75 %

Injazat Technology Fund O m nix Media Networks 4 5 .0 Info not dis c los ed 3 1%

Injazat Technology Fund J ordan Training Technology Group 4 1.0 Info not dis c los ed 48 %

Am wal Fund I B ank Audi 2 21.3 9 1.1 Info not available

Am wal Fund I Lebanes e Canadian B ank 2 7.1 13 .5 Info not available

NB K Capital NB K Capital E quity Partners Yudum Food 1 18 .0 70.7 Info not available

HS B C Private E quity ME HS B C Private E quity Middle E as t Havelock AHI 4 3 .0 Info not dis c los ed Info not available

Global Inves tm ent Hous e

Abraaj Capital

Am wal Al Khaleej Com m ercial Inves tm ent Com pany

Injazat Capital


33

Excluding the EFG sale from the analysis, the trend of exits over the last decade has focused on the oil and gas sector, which has seen exits worth USD 393 million, followed by Transport (USD 166 million) and Telecom and IT (USD 158 million). In terms of the number of exits, the Telecom and IT sectors top the table with 13 each, while there have been 11 in Financial Services.

Returns have been promising. However, given the limited number of exits and the different risk profiles it is difficult to build a picture of the expected return profile. According to EMPEA research the average net IRR expected by international institutional investors from PE commitments in the MENA region is 22.8% (compared to 22.6% for all emerging markets and 17.2% for the US). Hence, based on the exits track record so far, the MENA region has exceeded these expectations.

From the publicly available information it appears that most exits to date have been by way of IPOs, sales to co-investors or to corporate investors rather than the secondary PE market.

Exits by PE Houses Between 1998 & 2007 by Sector


E xits by PE hous es betw een 1998 & 2007 by s ector


Oil and G as 17%

T rans po rt 7%

T elec o ms and IT 7%

C o ns truc tio n6%

Others 6%


Thought Leadership

Global corporate leaders emanating from the Middle East were a rare breed until recently, but private equity is impacting the corporate landscape by supporting worthwhile regional companies and expanding them globally.

During the last century, the private sector had a limited role in most Arab economies, while the public sector dominated economic activity in oil and gas, petrochemicals, heavy industry, transportation, healthcare, education, utilities and municipal services. The weak role of the private sector was further diminished by the size of the economy: the Arab countries combined had an economy in 2001 smaller than Spain.

However, over the past five years, rapid economic growth, which exceeded 20 per cent in nominal terms in several Gulf countries, together with clear government policies liberalising the economy, have translated into stellar growth for the private sector.

Leading Arab corporations quickly consolidated their position in the local market and started exploiting the competitive advantages that are inherent to the regional economy in order to go global. In logistics, Agility and Aramex are leading the way. In water desalination and treatment, Metito is increasing its market share locally and expanding globally. In oil services, Maritime Industrial Services, Petrofac and Lamprell have emerged as strong competitors to global players dominating the field. In telecommunication services, Zain, Orascom and Oger Telecom have all penetrated markets outside the Middle East from Italy to South Africa. In interior contracting, Depa United is the third largest interior contractor globally.

From the Gulf Capital portfolio, several global leaders have emerged. Maritime Industrial Services, in which Gulf Capital is the largest shareholder, is now the leading regional offshore oil and gas contractor. In 2007, it was listed on the Oslo stock exchange as part of its global drive, and has so far received orders for rigs from Norway to Singapore, increasing its backlog from USD 100 million pre-Gulf Capital to almost USD 1 billion today. This year, for a Norwegian client it completed the first ever off-shore rig built in the Middle East – a surprising accomplishment in a region that is the largest exporter of oil.

Gulf Capital is also a major investor and backer of i2, the number one mobile phone distributor in the Middle East and Africa. Gulf Capital has helped increase the geographical footprint of i2 from 13 countries in 2006 to 22 countries today. Similarly, i2 sales rocketed from SR 3 billion in 2006 to SR 7 billion today, positioning i2 as the clear leader in the Middle East and Africa and one of the top players in the world.

34

CEO, Gulf Capital

How Private Equity is Building Global Players

Dr. Karim El Solh,

Thought Leadership


The continuing growth of MENA’s private equity constitutes the building block for the development of a secondary market. Expected to emerge in the medium run, the secondary market will contribute to the long term growth of the industry. Private Equity in MENA has grown in scale, depth and reach. It has risen as an attractive option to capital markets and real estate investments. In addition to regional managers, some prominent international players have already ventured into the region through direct investments or co-branding, while others are planning to enter at a later stage as the industry further matures. While the industry progresses from fund raising to the deployment and investment stages, investment managers will experience a new set of challenges. In fact, only a few managers have proven their ability to successfully source deals, add value and profitably exit investments. Competition is a challenge not to be taken lightly. Most importantly, investors' patience over a 6 to 8 year period is yet to be tested in the MENA region. The rise of the secondary market offers a valuable opportunity supporting the long term growth and attractiveness of private equity as an alternative asset class in MENA. First and foremost, it addresses the liquidity issue that LPs might face over the life of the fund. The secondary market will also empower investment managers with the flexibility to shift their strategies, change their investment policy or rebalance their portfolio allocations. For secondary funds, secondary markets represent a channel to confidently access one of the most promising emerging markets, overcoming obstacles faced by first movers, while managing vintage year exposure and diversification. Private Equity is booming in MENA. It is developing at a faster pace than anywhere else in the world. Driven by regional and international macro-economic factors and an enticing regulatory environment today, we believe that the growth cycle may even be extended over the medium and long run by the surfacing of a secondary market. Secondary markets will undoubtedly attract international private equity houses and prompt the development of a regional secondary fund.

35

Principal – Private Equity, Injazat Capital

Secondaries: Another Promising Dimension

Rami Bazzi (CFA),


5 Emerging trends of private equity in MENA in 2007

5.1 Analysis of funds and investments in 2007 5.2 Implications for the future

38

5.1 Analysis of funds and investments in 2007

Funds

Size –

Note: The size of the funds is based on the announced value expected to be raised by a fund. The amounts shown represent the amount raised by the funds.

The average amount raised per fund has increased by 62 per cent from USD 169 million in 2006 to USD 274 million in 2007.

In 2007, 64 per cent of all capital raised was for funds larger than USD 500 million, while in 2006 this figure was 19 per cent (22 per cent in 2005).

The only fund to have raised more than USD 1 billion is the Infrastructure and Growth Capital Fund managed by Abraaj Capital. The fund was announced in 2006 at a value of USD 2 billion and has raised the full USD 2 billion to date (USD 500 million through a first close in December 2006 and USD 1.5 billion through a second close in December 2007). The only other fund announced with a value greater than USD 1 billion is the Global Buyout Fund L.P. managed by Global Investment House. The fund was announced in 2007 at a value of USD 1.5 billion and has raised USD 0.5 billion to date.

The tendency to raise funds larger than USD 1 billion will probably continue in the future, particularly for infrastructure investments. With billions of dollars of infrastructure assets set to be privatized or to be built, infrastructure funds today have a much larger market in the region than buyout funds.

Yet, the mid-market funds (USD 100 million to USD 500 million) maintained a significant market share in 2007, and are expected to remain a major player on the regional scenes for years to come. With transaction sizes centring around the USD 20 million mark, such funds will be in an optimum position to tap into the majority of the deals in the region.

Funds Raised to Date by Size



Fun ds ra ised to date by s ize

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007

mo re than 1000

501 - 1000

201 - 500

101 - 200

51 - 100

21 - 50

0 - 20

USD

Mill

ion


39

Profiles of MENA PE Funds:

Investment focus:

The growth in the private equity market has been diverse in 2007, with a shift in the focus from only buyout funds to infrastructure, balanced and oil and gas focused funds. Balanced funds increased from 4 per cent in 2005 to 26 per cent in 2007.

Eighty-two per cent of funds raised in 2005 were for buyout funds, with these totaling USD 2 billion. The proportion of buyout-focused funds declined in 2006 and 2007 to 61 and 18 per cent, respectively.

Infrastructure funds represented 38 per cent of total funds raised in 2007 primarily as a result of the USD 2.0 billion Abraaj Infrastructure and Growth Capital Fund. With the rising need for infrastructure funding, particularly for power and water sectors, local governments will be looking for external capital, providing opportunities for PE funds.

Venture capital funds raised money in 2005 and 2006, but lost their appeal in 2007. Venture capital funds still have to ascertain their viability in the MENA region in terms of availability of quality deal flow and realization of successful exits.

Funds Raised to Date by Sector Focus



Fun ds ra ised to date by sector focus

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007

B alanc ed B uyo uts Infras truc ture Oil and G as and E nergy V enture C apital Others

USD

Mill

ion

40

Geographical focus

Note: Others in 2007 include Infrastructure and Growth Capital Fund of USD 2 billion managed by Abraaj Capital.

Funds focused on the MENA region continue to represent the majority of the total funds raised. However, the concentration of funds focused on the region over the last three years has reduced from 80 per cent of the funds raised to date in 2005 to 46 per cent in 2007.

Funds Raised to Date by Region Focus - Total Funds


Funds rais ed to date by region focus - total funds

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007

M E N A regio n M E N A S A regio n Others

USD

Mill

ion


41

Within the MENA region, the proportion of funds with a specific country focus has declined as more and more funds have been raised with a focus on the overall MENA region. These MENA focussed funds accounted for 18 per cent of the MENA capital raised in 2005, while in 2007 this figure had jumped to 58 per cent. Furthermore, GCC-specific funds decreased from 47 per cent in 2005 to 24 per cent in 2007.


Funds Raised to Date by Region Focus - MENA Funds


Funds rais ed to date by region focus - M E N A funds

-

500

1,000

1,500

2,000

2,500

3,000

2005 2006 2007

M E N A o nly G C C M E N A and o thers Others

USD

Mill

ion

42

Investments

Size of investments

PE investments in 2007 broke the ‘billion dollar’ investment barrier for the first time, with one investment crossing this milestone - Abraaj Capital’s investment in Egyptian Fertilizers Company (USD 1.4 billion).

From the past decade, 2007 was clearly the most prominent year in terms of the size of total announced investments with USD 3.5 billion announced last year (54 per cent of the total investments of the past decade) as compared to total investments during 1998 to 2006 of USD 3 billion.

In terms of the number of investments; a total of 62 were announced in 2007 compared to 50 in 2006 and 56 in 2005. This suggests the average investment size has increased relative to the historic average.Excluding the billion-dollar transaction in 2007 (and the investments without size details disclosed in the public domain) the average investment size in 2007 was USD 35 million, compared to USD 26 million in 2006.

Sector focus of PE investments

The Basic Materials sector has enjoyed the highest amount of PE investments in 2007 with total investments of USD 1.4 billion. The above analysis is skewed due to the inclusion of two investments of over USD 500 million, one in 2006 and one in 2007.

Preferred s ector of PE inves tments during 2005 and 2007

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007

B as ic materials T rans po rt F inanc ial S ervic es C o ns truc tio n

H ealthc are Oil and G as C o ns umer G o o ds Others

Preferred Sector of PE Investments Between 2005 & 2007


USD

Mill

ion


43

Preferred s ector of PE inves tments during 2005 and 2007 (excluding 2 trans actions of over U S D 500 million)

-

500

1,000

1,500

2,000

2,500

2005 2006 2007

H ealthc are F inanc ial S ervic es T rans po rt Oil and G as

C o ns truc tio n C o ns umer G o o ds Others

Excluding these two investments to show a less biased picture, a different trend emerges:

Note: the above chart excludes the following investments: i Abraaj Capital’s investment in EFG Hermes Holding Company in 2006 (USD 501 million)ii Abraaj Capital’s investment in Egyptian Fertilizers Company (Egypt) in 2007 (USD 1.4 billion)

The healthcare, financial services and oil and gas sectors become the most preferred sectors for PE investments in 2007 with total investments for the year of USD 449 million, USD 298 million and USD 357 million respectively.

Preferred Sector of PE Investments Between 2005 & 2007(Excluding 2 investments of over USD 500 Million)



USD

Mill

ion

Thought Leadership

Convergence has been a buzzword related to the telecom, media and technology industries since the late 1990s. That decade saw AOL merge with Time Warner; media companies embrace the Internet through content; and IP technology take over from traditional switching technologies to build and operate telecom networks. It is, however, only the last few years which have seen the true coming together of the formerly separate industries and it is increasingly difficult to classify a company as a telecom, media or technology player.

One of the primary drivers of this convergence is the maturity of existing business models. Without significant growth potential in their existing operations, companies are trying to capitalise on an existing customer base or network assets by offering new products and services, or unique or proprietary content by utilising new channels and delivery methods. Enabling technologies or improvements in existing technologies have similarly made it possible to provide services to markets where it earlier had not been economical. Examples of the latter include wireless networks replacing fixed networks for serving the last mile and lower handset prices opening up new customer segments to voice, data and content.

While these trends have already emerged in more mature or deregulated markets in Europe, the Americas and Asia Pacific, they have also started to impact the MENA region. We are currently at the beginning of a second wave of rapid growth. From the demand side, increasing interest in Arabic content, search engines and regional portals is driving the expansion of broadband in the region. From the supply side, this is being enabled by increased network capacity and an extended opportunity to offer new services and access.

The supply and demand drivers are creating investment opportunities which provide higher growth and returns than investing in the traditional mainstream technology, telecom and media business models:

From the supply side: New opportunities exist for companies to provide services traditionally delivered in-house. The most significant are managed IT services, including content and service delivery platforms, billing systems, network operations and maintenance and call centres. New licenses and alternative access provision technologies also represent an opportunity for new players to enter the space. Fixed wireless access technologies are a good example of this.

From the demand side: Investment opportunities will emerge for developers of Arabic media and early developers of Web 2.0 and 3.0 applications and content. Solid businesses can be built on business models which have proven successful in other markets.

The flourishing growth of primary services will create a number of new companies targeting these opportunities. While the number of players will expand for a period, at some point the market will consolidate. A further investment theme will be to identify and invest in the key consolidators or the companies with strategic assets or customers, which are therefore most likely to be acquired.

44

Principal, Delta Partners

The Converging Era of Telecom, Media and Technology Industries in the MENA Region

Morten Kvammen,


45

Geographical focus of PE investments

Egypt has been the most preferred sector for PE investments for 2006 and 2007 with a total investment of USD 1.6 billion in 2007. The fact that the largest two transactions have been in Egypt highlights the potential of Egypt as a destination for investments.

Note: the above chart excludes the following investments: i Abraaj Capital’s investment in EFG Hermes Holding Company in 2006 (USD 501 million)ii Abraaj Capital’s investment in Egyptian Fertilizers Company (Egypt) in 2007 (USD 1.4 billion)

Excluding these two investments, the UAE has historically been the preferred location for PE investments in the region, with the country’s PE investments passing the billion dollar mark in 2007.

Geographical Split of PE Investments Between 2005 & 2007



Geographical Split of PE Investments Between 2005 & 2007(Excluding 2 investments of over USD 500 Million)


G eographical s plit of PE inves tments during 2005 & 2007

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007

UA E E gypt S audi A rabia J o rdan T urkey Others

G eographical s plit of PE inves tments during 2005 & 2007 (excluding 2 trans actions of over U S D 500 million)

-

500

1,000

1,500

2,000

2,500

2005 2006 2007

UA E E gypt S audi A rabia J o rdan T urkey Others

USD

Mill

ion

USD

Mill

ion

46

As the Saudi economy liberalises, Saudi Arabia is emerging as a preferred destination, with investments in 2007 of USD 568 million. Assuming that the Saudi liberal economic policy is maintained and given the size of the Saudi economy relative to the region, it is expected that Saudi Arabia will assume a bigger share of total investments in the future.

5.2 Implications for the future

MENA PE activity is evolving from its take-off in 2005 to a more mature stage of larger size deals, value creation and opportunities for exits. The challenges for private equity going forward are:

- Enhancing deal flow and concluding larger transactions: The amount of funds raised and the expected continued momentum of fund raising in the future imply that the PE industry has to secure additional deals of larger size. Back in 2004, industry pundits estimated that there would be no more than 10 PE deals in the GCC, and time has proved them wrong. Today, it is difficult to predict how the additional billions of money raised will be deployed, but macro-economic trends in the region – liberalization, growth of the private sector, and privatization – are all favourable factors for creating more and larger deals. Furthermore, the PE industry is maintaining a positive image, an image of good partnership. This image will make PE firms an acceptable partner for both the private and the public sectors.

- Upgrading the talent pool: As a nascent industry no older than 4 years, the depth and breadth of local talent is limited. The legal, operational, and financial nuances of the region make importing talent from developing economies less effective than anticipated. However, local PE players are successfully marrying local knowledge of doing business with international expertise in structuring and managing PE deals. We have seen increased sophistication in deal structuring in 2007 as PE firms imported talent and blended it with their local teams.

- Dealing with the entry of global players into the market: Several global PE players are now operating in the region. The Carlyle Group is now in the fund raising stage for a MENA fund. 3i, CVC, and Deutsche Bank have partnered with regional PE players. Ripplewood and Actis have made single investments in Egypt. Others are scouting the region for opportunities. It is expected that global players will eventually establish a strong foothold in the region; however, based on lessons learned from Asia, regional players will continue to have a significant role as both partners and competitors for global funds.

- Developing multiple exit options and not relying heavily on IPO-only strategy: The strong IPO market, weak private sector, and constraints on foreign direct investment have increased the importance of IPOs as an exit opportunity. However, it is expected that IPOs will have a smaller share of exits in the future. Alleviating foreign investment restrictions in several GCC countries will also increase the number of sales to international trade buyers. Finally, sale to financial buyers will be more common in the future as is the case in more developed economies.

- Enhancing the financial engineering of deals: Debt providers in the region are increasing in sophistication and awareness, and hence, will allow PE players to structure more sophisticated and better leveraged deals. Acquisition finance has been rarely used so far, but banks are developing their acquisition/structured finance expertise. Specialized mezzanine providers have been non-existent, but in 2007, two PE players announced that they are raising Mezzanine funds for the region. This will furnish sophisticated PE players with the tools to structure more sophisticated deals.

Thought Leadership


There is a tendency to focus on the differences between private equity in the Middle East and the rest of the world. While there is no doubt that to operate successfully in this region one must be sensitive to both market and cultural differences, the emergence and growth of global private equity firms demonstrates that the similarities end up outweighing the differences.

Industry experience, operational capabilities, the ability to attract top management, and structuring and financing expertise, are transferable and have proved to be a competitive advantage when private equity moved beyond the US to Europe and then to Asia.

But these lessons cannot be transferred blindly. In the Middle East today, in addition to political, regulatory and foreign ownership considerations, the fact remains that by international standards the total number of deals is low, they are still relatively small, mostly equity financed, and often minority (rather than control) transactions. This has as much to do with where the private equity industry is in its stage of development, as it is a regional trait. Over time, as the Middle East private equity market continues to mature, the differences are likely to become even less pronounced.

47

Managing Director, Head of Middle East and North Africa, TPG Capital (Texas Pacific Group)

How different is Private Equity in the Middle East?

Ramzi Gedeon,


6 Sovereign Wealth Funds

6.1 Introduction 6.2 Key trends 6.3 Exits 6.4 What’s next for SWFs?

50

6.1 Introduction

Sovereign Wealth Funds have existed since at least the 1950s, but their total size worldwide has only increased dramatically over the past 10 to 15 years. This has seen the combined value of SWFs jump from around USD 500 billion in the early 1990s to more than USD 2 trillion today.

According to Merrill Lynch the value of assets held by SWFs will quadruple to USD 8 trillion by 2011 and the IMF is predicting this figure to exceed USD 12 trillion by 2015.

With oil prices reaching record levels over the past five years – oil was USD 20 per barrel in 2002 compared to more than USD 80 per barrel in 2007 - a significant amount of wealth has been generated by the major oil producing nations. This has resulted in significant cumulative current account and trade surpluses for Gulf SWFs, which are dramatically increasing their presence on the international scene as they try to diversify their economies away from a reliance on oil and gas.

According to a recent report from Thomson Financial, Gulf SWFs accounted for 38 per cent of global SWF deals during the past 12 months, which indicates SWFs spent USD 83 billion on 183 deals in 2007.

Historically, SWFs were conservative and concentrated on low risk instruments such as government bonds and bank deposits. However, there is now a growing trend to move towards private equity type deals, real estate, commodities and hedge funds. There will be a growing appetite for foreign investments in the coming years as petrodollar wealth is recycled on global financial markets.

Key SWFs in the Gulf region include the investment authorities of Abu Dhabi Investment Authority (ADIA), Abu Dhabi Investment Council (ADIC), Ras Al Khaimah Investment Authority (RAKIA), Qatar (QIA) and Kuwait (KIA). ADIA is the largest fund amongst oil exporters and has accumulated assets estimated at between USD 650 billion and USD 1 trillion. KIA with some USD 200 billion of assets appear to be allocating a larger share of its portfolio to emerging markets. Saudi Arabia’s SWFs are currently some way behind those in the UAE, but are catching up as their asset base increases thanks to the country’s oil wealth. The US sub prime crisis has seen some regional sovereign funds take advantage of the turmoil to build up stakes in the likes of Citigroup and UBS, with these high profile acquisitions making SWFs the subject of global debate. Their increasing power and liquidity is creating pressure and criticism from western markets, with questions raised over foreign government-owned investment vehicles acquiring targets of strategic significance. The limited transparency of these funds is a growing concern in the global market. They are under pressure to become more accountable and to adhere to higher standards of governance, even more so than other PE funds. Western markets are calling for SWFs to ensure their investment decisions are shown to be taken on financial grounds rather than being motivated by political or other non economic motives.



51

S W F inves tments in the las t 5 years

1 1

19

15

28

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2003 2004 2005 2006 2007

Inves tment s ize N umber o f inves tments

6.2 Key trends

Basis of information

For the purposes of this report, SWFs have been defined to include official SWFs as well as entities that act as SWFs (particularly regarding their sources of funds) and which would not necessarily be classified under traditional Private Equity investments (these include Mubadala, Istithmar and Dubai International Capital).

Given the limited transparency in disclosure of SWF transactions, our analysis is limited to the investments which have been publicly announced as opposed to all the SWF investments in the region. We are aware that the trends in our analysis are not necessarily representative of the entire market as for a large proportion of transactions there is limited information.

SWF investment activity in the region has significantly increased in the last three years with 2007 having the largest number of investments. On the back of rising oil prices, funds have been accumulating reserves and MENA sovereign investment funds have become prominent players in the global market.

SWF Investments in the Last 5 Years



USD

Mill

ion

52

In the last five years, Istithmar has made the largest number of investments (22) followed by Dubai Investment Capital and Mubadala. However, based solely on investment size, ADIA and Mubadala have invested the largest amount of capital to date.

In the last three years, the trend has been to move away from the more traditional real estate and basic material sectors to diversify the breadth of investments.

The financial sector is becoming an increasing focus for both GCC and MENA-based SWFs, which have been buying stakes in banks, money management firms and brokers.

S W F in vestm en ts by sector

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2005 2006 2007

Others

A uto mo tive

Indus trial M anufac turing

C o ns umer G o o ds

T elec o m and IT

T ravel and T o uris m

R eal E s tate

H ealthc are

F inanc ial s ervic es

Investment Activity by SWFs in the Last 5 Years


SWF Investments by Sector


USD

Mill

ion

Inves tment activity by S W Fs in the las t 5 years

1

12

4

12

35

22

3

-

2,000

4,000

6,000

8,000

10,000

12,000

A D IC QIA Is tithmar K IA D IF C D IC A D IA M ubadala

Inves tment s ize N umber o f inves tments

USD

Mill

ion


53

QIA has taken a 20 per cent stake in the London Stock Exchange. In 2007, DIC made sizeable investments in the banking giants HSBC Holdings in the UK and ICICI bank in India. ADIA invested USD 7.5 billion in the largest US bank, Citigroup, to acquire a minority stake. This provided a critical cash injection at a time when the bank faces multi-billion dollar losses due to significant mortgage related asset write-downs. Recently, Kuwait Investment Authority was a significant investor in Merrill Lynch’s USD 4 billion second round of capital raising.

A similar trend has been seen in China where China Investment Corporation (CIC) created the world’s fifth largest SWF from trade surpluses and acquired a 9.9 per cent stake in US investment bank Morgan Stanley. Meanwhile, Singapore’s Tamasek bought into Merrill Lynch.

SWFs continue to face political opposition and Western commentators have questioned whether they should be able to hold a stake of more than 10 per cent in individual banks.

However, despite the criticism against SWFs, they have played a significant role in defusing the credit crisis threatening the US economy. They have high liquidity pools which have been instrumental in the global economic recovery

Significant infrastructure investment will be required in emerging markets in the next few years. SWFs already play an important role in this by investing cross-border between emerging market countries as well as via investments in local financial institutions.

Although there is still a significant concentration on the US and the United Kingdom, in 2007 there has been increased focus on investing in the MENA region and developing markets. In 2007, USD 6.6 billion was invested into the UAE, the largest transaction being Mubadala’s USD 4 billion investment in Emirates Aluminium.

SWF Investments by Geography



S W F in vestm en ts by geography

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2005 2006 2007

Others

C hina

M alays ia

G ermany

UA E

UK

US A

USD

Mill

ion

54

In 2006, Istithmar made five acquisitions in the US totaling USD 2.4 billion, with half of this money invested in the US real estate market (including 280 Park Avenue which was subsequently sold in 2007).

In August 2006, DIC snapped up Travelodge, the UK’s budget hotel business, paying USD 1.3 billion for the chain’s 291 hotels.

However given the political concerns expressed by the United States and Europe, SWFs are looking to diversify their strategies by investing in non-developed markets such as Asia, particularly China and India, which appear to be more welcoming to SWFs and where growth remains robust. Istithmar opened offices in China and is looking to invest in the world’s most populous country.

6.3 Exits

Exits in the SWF market seem limited, because the market perception is that they prefer to have long term, risk-averse portfolios and tend to pursue buy-and-hold strategies, with no short positions and perhaps no borrowing or direct lending of any kind. They probably have long horizons and, like other long-term investors, are willing to step in when asset prices fall.

Nonetheless there were some sizeable exits in 2007 of investments bought in the preceding two years:

- Istithmar’s sale of its two Park Avenue properties in the US. It claims the original strategy was to hold on to these investments and attributes the sale to ‘unusual opportunities’ in the market. Istithmar made a 63 per cent return on the 230 Park Avenue purchase price (bought for USD 705 million in 2005 and sold for USD 1.1 billion) and a 12.5 per cent return on 280 Park Avenue (bought for USD 1.2 billion in 2006 sold for USD 1.4 billion).

- DIC acquired the Tussauds Group in 2005 for USD 1.5 billion and sold it to Merlin’s Entertainment Group two years later for USD 2 billion (which is majority owned by Blackstone private equity group) while maintaining a 20 per cent stake in the merged Group.


S W F exits

S W F Y ear T arget B uyer V alue (U S D millions )Dubai International Capital 2007 Tus s auds Group M erlin E ntertainments Group, UK 2,000Dubai International Capital 2007 DaimlerChrys ler Info not available Info not available Istithmar 2007 280 Park Avenue B roadway Partners 1,350

Istithmar 2007 230 Park AvenueCons ortium including Goldman S achs , W hitehall Fund and M onday Properties

1,150

KIA 2005 B P Plc Info not available 2,000QIA 2000 B LC B ank Info not available 153


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6.4 What’s next for SWFs?

At present, SWFs may have power through liquidity and the amount of cash they can raise. Yet they do not necessarily provide the added advantages traditional private equity funds can offer a company, such as industry knowledge and synergies from a global portfolio.

However, given their relatively new investing activities in the global market, SWFs have been focused on recruiting experienced and western educated personnel to manage their funds along the lines of well established PE funds.

Last year was impacted by a number of large transactions driven by the US sub-prime crisis. Troubled lenders’ immediate need for liquidity saw them welcome cash from SWFs.

GCC sovereign funds are expected to expand in number, particularly in Saudi Arabia. With oil prices remaining buoyant, SWFs will continue to be influential players on the global financial markets. The Saudi Arabian Monetary Agency (SAMA) recently announced it is considering launching a USD 6 billion fund this year with the remit of investing in foreign firms. Even if oil prices decline, petrodollars will continue to grow at a robust average rate.

However, it is uncertain what 2008 will bring for sovereign funds on the regulatory front. Western markets are trying to introduce global regulatory standards and transparency rules for state-run investment vehicles, and such policies will contradict with the local agendas of some SWFs.


7 Survey on the Impact ofPrivate Equity and Venture Capital on the

Development of Private Equity Backed Companies

7.1 Introduction 7.2 Background

7.3 Highlights 7.4 Survey results

58

7.1 Introduction

The second regional survey on the impact of Private Equity and Venture Capital on the development of Private Equity backed companies was conducted in January 2008. The survey aims to provide a greater understanding of the Private Equity/Venture Capital environment in the Middle East, from the perspective of the companies receiving investment. However, almost half the respondents received funding one year or less than one year previously, which suggests a rising trend in the number of companies enjoying private equity backing.

7.2 Background

Methodology

Primary research for the 2007 survey was conducted through questioning top management of 18 companies receiving private equity investment in the GCC region. The companies surveyed covered a breadth of industries from across the GCC, as shown below.

Company profiles

Respondents by business activity

Industry No of companies

Banking/Financial 3

Construction 1

Energy/Utilities 4

Education 1

Hotel Management 1

Media & Communications 1

Technology software/hardware and services 1

Trade & Services 1

Technology Development 1

Water/Wastewater & Marine 1

Others 3

Average Years of Private Equity Investments in Companies

7 Survey on the Impact ofPrivate Equity and Venture Capital on the

Development of Private Equity Backed Companies

A verage y ears of private equity in vestm en t in com pan ies

22%

22%

17%

17%

11%

11%

0% 5% 10% 15% 20% 25%

les s than o ne year

1 year

2 years

3 years

4 years

5 years o r mo re


59

In terms of geographical reach of the companies surveyed, 45 per cent have facilities globally, 44 per cent are present throughout the Middle East (including the GCC), while the remainder are limited to their respective nations.

20 per cent of companies surveyed had annual revenues of less than USD 10 million , 40 per cent had revenues of between USD 10 million and USD 50 million, 33 per cent had revenues of between USD 100 million to USD 500 million, and one of the companies earned annual revenues of more than USD one billion.

The average number of employees in the participating companies was 1,133.

Scope of the survey

The scope of the survey was largely unchanged from 2006 and was primarily aimed at providing insight into the following areas:

• Why do companies seek Private Equity or Venture Capital investment? • What benefits and drawbacks does external investment bring to companies? • What are the trends in the Private Equity market in the Middle East? • How successful have Private Equity and Venture Capital investments been in the GCC, and why? • What next for Private Equity backed companies?

7.3 Highlights

Key headlines that can be drawn from the results are discussed below and highlight similar trends to those which emerged in the 2006 survey:

➢ Reasons for seeking Private Equity or Venture Capital investment The main reason for companies seeking Private Equity or Venture Capital investment was identified as the need for additional capital for future growth followed by a buyout of existing shareholders.➢ Obstacles faced in negotiating investments The most frequently encountered obstacles in negotiating investments identified by those interviewed included valuation, control of board of directors and timeline for due diligence.➢ Investment resulting in enhanced performance All the companies surveyed experienced an increase in net profitability which ranged from 30 per cent to as high as 300 per cent.➢ Interaction with companies invested into All respondents identified some form of interaction with the private equity company, with the most common being board meetings.➢ Non financial contributions In addition to financial investment, other key value enhancers include financial advice, marketing, business contacts and strategic alliances.➢ Initial public offerings are seen as the most favourable exit strategy Over half of the companies interviewed in the survey listed an IPO as the preferred exit strategy, with 42 per cent proposing to launch an IPO in the next two to four years.

7 Survey on the Impact of Private Equity and Venture Capitalon the Development of Private Equity Backed Companies

60

7.4 Survey results

Of the 18 respondents interviewed not all questions were fully answered by all individuals. The trends presented in the analysis below are skewed to represent the results for which a response was given (not necessarily all 18 respondents) as opposed to the entire set.

Why do companies seek Private Equity or Venture Capital Investment?

The overwhelming reason for accepting external funding identified was the need for additional capital for growth (38 per cent of the respondents), followed by providing assistance for management to launch an IPO (17 per cent) or a buyout (17 per cent).

However, on the flip side, when participants were asked why they thought some companies have not co-operated with private equity or venture capital firms, the main reason given was fear of control, followed by a lack of understanding, which appears to stem partly from the relative unawareness of private equity’s role and contribution.

What were the main obstacles faced when negotiating the investment with the private equity or venture capital firm?

Reason for Receiving PE InvestmentsR eason for receiv in g PE in vestm en t

Others22%

C apital fo r ac quis itio n

6%

Launc h IP O17%

B uyo uts17%

C apital gro wth

38%

2 1%

18 %

14 %

14 %

7%

7%

18 %

0% 5% 10% 15% 20% 25%

Others

A greeing exit s trategy

Owners hip

Inves to r rights and privileges

T ime line fo r due diligenc e

C o ntro l o f B OD

V aluatio n


61

The main obstacle the participants faced when negotiating the investment with the private equity or venture capital firm was differences in valuation of the company (21 per cent of the respondents).

Other areas of concern include control of the board of directors, the timeline for due diligence and investor rights and privileges.

These findings highlight the concerns of companies in the region, with family owned businesses reluctant to give away too much control.

How does private equity interact with your company?

When asked how Private Equity investors interacted with the company being invested in, 56 per cent of participants said board meetings. However, just over a third also included frequent interactions with senior management.

Encouragingly, none of the companies surveyed had silent investors. In only one case had the investor appointed management.

PE’s Interaction with Investee Companies


PE's in teraction w ith in vestee com pan ies

N o lo nger invo lved

4%A ppo inted

management4%

Interac tio n with s enio r

management36%

B o ard meetings56%

62

What are the changes in company performance seen since receiving Private Equity or Venture Capital funds?

With the exception of several companies only receiving funding in the last year and consequently unable to comment, all the firms surveyed experienced an increase in net profitability which ranged from 30 per cent to 300 per cent.

Participants also saw increases in sales revenue (average rise 92 per cent), employment, investment expenditure (average rise 86 per cent) and exports.

What benefits does external investment bring to companies?

Average Impact on performance after receipt of Private Equity or Venture Capital

Areas and Extent of the PE or VC’s Non-financial contribution to the Company’s PerformanceA reas an d ex ten t of the PE or V C's n on -fin an cia l con tribution

to the com pan y ’s perform an ce

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

G o o dc o ntributio n

C o ns iderablec o ntributio n

S mallc o ntributio n

M arket and indus try kno wledge

B us ines s c o ntac ts and s trategicallianc es

K no w-ho w

S trategy

F inanc ial advic e

M anagement rec ruitment

M arketing

A verage im pact on perform an ce after receipt of private equity or ven ture capita l fun ds

9 5%

4 3 %

8 6 %

3 2 %

9 2 %

9 2 %

0% 20% 40% 60% 80% 100%

A verage annual perc entage inc reas e

S ales revenue E xpo rt E mplo yment

Inves tment expenditures R es earc h & develo pment N et pro fitability


63

Time scale for commencing the IPO procedures

8%

25%

42%

8%

17%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Already started

Within 1 – 2 years

Within 2 -4 years

After 4 years

Already completed

Private equity’s key non-monetary contribution was providing financial advice. Marketing, strategy, business contacts and strategic alliances also played a relatively significant role.

In several cases, corporate governance was high on the list, and in one case, research and development was included as a non-financial contribution.

What is the planned exit strategy?

More than half the private equity companies surveyed said launching an IPO was the planned exit strategy, with two companies having already completed an IPO. Several companies were unsure of their exit strategy and were considering all available options.

For those entities planning an exit by means of an IPO, 42 per cent said they expected this to be launched within two to four years, while only a quarter had plans to commence an IPO within the next one to two years.

PE investments can be seen as an intermediary step to prepare companies for an IPO. There is a relative lack of readiness in portfolio companies in the MENA region with a large proportion of the investments requiring several years before they are ready to consider an exit strategy.

Strategy of Exits by Private Equity/Venture Capital Firm

Timescale for Commencing the IPO Procedures


S tratregy of ex ist by Private Equity /V en ture Capita l fi rm

IP O53%

S ale to s trategic buyer 30%

S ale to o ther inves to rs

17%

Thought Leadership

Throughout 2007, private equity globally has faced a number of new challenges, including the recent turmoil in the debt markets. An underlying issue, particularly in the more developed markets of Europe, the UK and the US, has been one of public perception.

Whereas private equity has historically rarely been seen outside of the financial pages of the international press, there has been increasingly negative press in more mainstream media. Concerns have been raised about the tax position of private equity firms, their directors, portfolio companies and investors. Trade unions have joined others in expressing the view that the private equity business model is to take an extreme approach to minimising costs in newly acquired businesses, often at the expense of local employees.

Prior to the negative press, private equity was under no obligation publicly to disclose details of its funds, investments, financial results or tax position and, consequently, had largely chosen not to do so. In the markets where the most pressure was felt, however, the private equity industry has begun to improve its public relations with moves to communicate more transparently about its activities and, importantly, the benefits that those activities have brought to the wider community.

Whether such moves are born of a genuine desire to take some of the ‘private’ out of private equity, or simply an attempt to head off more rigorous outside regulation is not necessarily important. What is important is that private equity recognises the benefits of additional public disclosure. Private equity portfolio companies account for 20 per cent of employment in the UK and, as such, the industry must appreciate its responsibility and accountability to the economy as a whole if it is to be allowed to continue to enjoy the fruits of its economic success.

In the MENA region, the requirements for transparency are significantly less even than they have been in developed markets historically. As such, and given the overall climate of confidentiality in the region, there is relatively little publicly available data on local private equity, its activities and performance.

At present, the impact of this is simply that reports such as this one may not capture all available data and may not present a true reflection of performance. However, there are surely benefits to all of a move away from secrecy and unwillingness to share information.

In other markets, the image of private equity has undoubtedly suffered as a result of failing to address this issue before it was too late. Firms are now facing a raft of potential new tax law and reporting requirements which, if they had been more open in the past, may not have even been proposed. And what of potential investee businesses, particularly in the region, who may have reservations about inviting private equity investment into their companies? Additional transparency would help to demonstrate the value that private equity can add, helping to open up more investment opportunities.

The success of private equity in the MENA region is something worth shouting about, not just to increase profile, credibility and status among those within the private equity community, but to ensure that the reputation of private equity is maintained and enhanced across a wider audience.

64

Head of Private Equity, Middle East and South Asia (KPMG)

Private Equity – The Bad Guys?

Ashish Dave,

8 GVCA - Gulf Venture Capital Association

8.1 GVCA Overview8.2 Board Members

8.3 Member’s Directory

66

GVCA is a not for profit trade and industry association for Venture Capital (VC) and Private Equity (PE) based in the Kingdom of Bahrain to serve the whole region. Its prime role is to promote a risk-taking investment culture, develop skills, facilitate networking, and provide relevant information and statistics on VC/PE industry.

Mission: GVCA’s mission is to serve the VC/PE industry and foster its growth in the Region.

Goals: 1. Promote and advocate VC/PE as a vital industry, contributing to economic growth. 2. Facilitate communication and networking among stakeholders. 3. Gather and disseminate industry statistics and information. 4. Develop and promote professional and ethical codes of conduct. 5. Foster professional development and learning environment.

The Association’s activities cover several aspects of the VC/PE industry such as trends and strategies, legal/fiscal policies and regulations, investment models, management of fund raising and structures, technology evaluation and valuation, contracts and control rights, information/studies, early-stage funding, buyout, IPO, and corporate venture capital, among others.

Membership: Members of the GVCA include VC/PE companies, financial institutions, corporations, consultants, and business development organizations, among others.

Committees:The Association has established the following four committees to bring together members who represent their areas of expertise to work on GVCA activities and actions: 1. Membership Committee 2. Learning & HR Committee 3. Regulation Committee 4. Information & Statistics Committee

Contact info:Gulf Venture Capital Association9th Floor, Al Moayyed Tower, Seef, Manama, Kingdom of BahrainTel +973 17 584259 ext 333 ; Fax +973 17 564606e-mail: [email protected] ; website: www.gulfvca.org

GVCA Overview


67

GVCA Board of Directors


Murad MahmoudBoard Member, GVCADlala Holding, Qatar

Mr. Abdullah Al- Subyani President, GVCASaudi Aramco, KSA

Imad Ghandour Information & Statistics Chairman, GVCAGulf Capital, UAE

Hussein Rifai Regulation Committee Chairman, GVCAInjazat Technology Fund, UAE

Ihsan JawadBoard Member, GVCAZawya.com, UAE

Wissam KojokBoard Member, GVCA Silk Route, UAE

Oussama Tabbara Vice President, GVCANexia International, KSA

Mr. Mansour Al Khuzam Membership Committee Chairman, GVCAKhazaen Venture, Kuwait

Marwan Tabbara Treasurer, GVCAStratum, Bahrain

Ahmad Al Sari Board Member, GVCAMalaz Group, KSA

Khaled FouadBoard Member, GVCA

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ABC BahrainDavid [email protected]

Abraaj CapitalFrederic [email protected]

Abu Dhabi Investment CompanyRobert C. [email protected]

Al-Khonji Group of CompaniesQais [email protected]

Al-Shaikh InvestmentsNasser [email protected] Al-Tawfeek Company For Investment Funds Ltd.Dhafer S. Al-Qahtani [email protected]

Al-TuwairqiTariq [email protected] Al-TuwairqiSajjad [email protected] American University in DubaiRod [email protected] Ana Balat Capital Management LimitedDr YC van Dongen+90 212 2926640

ArcapitaNael [email protected]

ASA ConsultantsAdel Saudi [email protected]

Banatolia - Business Angel Network AnatoliaAlp [email protected]

Banawi Industrial GroupWaleed Al [email protected]

BarclaysLars [email protected]

Bayan Investment Co.Bassel Abu Ali [email protected] BEST [email protected] Boston BioCapital, LLCHoda Abou [email protected]

Bridge TechnologiesEhab Osman [email protected]

Buraaq Holdings India PVT [email protected]

Bushnak [email protected]

Carnegie Global VenturesLisa [email protected]

Catalyst [email protected] Chicago Capital Group, LLCWaseem [email protected]

GVCA Member’s Directory


69

Citadel CapitalMagda [email protected]

Dadabhai GroupQutub [email protected]

Delta PartnersMorten [email protected]

Denning and Company, LLCPaul [email protected]

Devcorp InternationalIbrahim Salem Al [email protected]

DevCorp InternationalJames Green [email protected] Devcorp InternationalK R [email protected]

Dinar Investment House Ltd.Azhar Abd [email protected]

Dlala Brokerage & Investment Holding (Q.S.C.)Murad M. [email protected]

Draper Investment CompanyDon [email protected]

Dubai InvestmentsG Bala [email protected] Ernst and YoungOmar [email protected]

East West Holdings Pvt. Ltd.Brian [email protected]

Elshawi ElectronicEssam [email protected]

Emc2 Management Consulting Corporate Finance, Mergers & AcquisitionsMatthias [email protected]

G.S.P.HOLDING PLC (GROUP)[email protected]

GA ConsultGeorge [email protected]

Glacier Technologies, Inc.Mansur [email protected]

Global Investment HouseShailesh Dash, [email protected]

Global Path [email protected]

Global Trade and Investment [email protected]

Global Venture Capital [email protected]

Gulf CapitalImad [email protected]

Gulf Investors Group [email protected]


70

Gulf Technology PartnersAhmad [email protected]

Hormud TelecomAhmed [email protected]

Injazat CapitalHussein [email protected]

[email protected]

Integration Capital & Trade, Inc.Aran [email protected]

Integration Capital & Trade, [email protected]

[email protected]

Investcorp BankRamzi Abdel [email protected]

Investia Venture CapitalSamir [email protected]

ISI Emerging Markets - Euromoney IIAhmet [email protected]

Islamic Corporation for the Development of Private SectorDr Ali [email protected]

Ithmar CapitalFaisal BelhoulTel: +971 4-282-5555 ; Fax: +971 4-283-1155

[email protected]

Jawad Habib-BahrainJose [email protected]

Jina [email protected]

KanooBader [email protected]

Kanz for Consultation and TrainingJamal H. [email protected]

Khazaen Venture CapitalMansour [email protected]

King Abdulaziz UniversityAdnan [email protected]

Kipco Asset Management [email protected]

Krol Spirits, [email protected]

KPMGAshish [email protected]

Liquid CrystalGerard [email protected]

M’Sharie LLCAbdul Aziz Serkal+971 4 3379333



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Malaz GroupAbdulaziz [email protected]

Malaz GroupAhmad M. Al-Sari [email protected]

Malaz GroupDr Fahad Al [email protected]

Millennium Private EquityIzzet [email protected]

MISR InternationalMohamed Mahmoud Hussein [email protected]

Motasem Khashoggi Law [email protected]

Munshaat Real Estate Co.Mostafa [email protected]

National Bonds Corporation PJSCNasser H. [email protected]

National Industries Group HoldingHetaf [email protected]

NBK CapitalSamir Assaad+971 4 3652806

NexiaOussama [email protected]

Noor Financial Investment CompanyAhmed [email protected]

NVCI GmbHGeorge Otterbacher+49 711 22254123

Oxford Capital Partners Ltd.Edward [email protected]

Parsa Financial Planners [email protected]

Private Equity & Venture CapitalPaul Mc [email protected]

Qatar Science & Technology ParkPaul Field [email protected]

Real Time Enterprise Venture [email protected]

RNB Group of CompaniesVinod [email protected]

SAGIAChams-Eddine [email protected]

Saudi Arabian AirlinesHani Al Jahdali+966 2 6225610

Saudi AramcoAbdulla Al [email protected]

Saudi AramcoHassan A. [email protected]

Saudi AramcoBasil A. [email protected]


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Saudi AramcoKhaled Al [email protected]

Saudi AramcoSami [email protected]

Saudi AramcoJareer M. [email protected]

Saudi Economic Development Co.Dr. Adnan Soufi+966 2 6066556

Selby [email protected]

SHUAA PartnersEyad Dowaji+971 4 3303600

Silk Route Capital GroupWissam [email protected]

StratumMarwan [email protected]

Suchefort & PartnerD. [email protected]

Swicorp CapitalTalha-Khan [email protected]

Swicorp CapitalJean-Guillaume [email protected]

Swicorp CapitalMarie [email protected]

TAIB BankSalah Saleh [email protected]

The Ascent GroupPeggy [email protected]

The National InvestorYehya [email protected]

Trans-Arabian Creative CommunicationsPhil [email protected]

TVM Capital GmbHDr. Helmut [email protected]

Wafik Abdel-Fattah CPAWafik Abdel [email protected]

ZawyaIhsan [email protected]


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Directory of Private Equity firms in MENA

Abraaj CapitalAbu Dhabi Investment CompanyAbu Dhabi Investment HouseAcceleratorAl Arabi Investment GroupAl Futtain Real EstateAl Madina Financial and Investment ServicesAl Tawfeek Company for Investment FundsAmwal Al KhaleejAthar Al Majd HoldingsAtlas Investment GroupAttijari Finances CorporationBMCE BankBMG Financial AdvisorsBoubyan BankByblos BankCitadel CapitalConcord International InvestmentsCorecapCorporate Finance HouseDaman SecuritiesDeutsche BankDubai International CapitalDubai Islamic BankDubai Ports WorldEFG-Hermes Private EquityEmerging Markets Partnership (Bahrain)Evolvence CapitalFoursan GroupGlobal Investment HouseGulf CapitalGulf Finance HouseHamilton LaneHBG HoldingsHSBC Private Equity (Middle East)

Injaz Mena InvestmentsInjazat CapitalInstrata Capital BSC (c)Investcorp Bank B.S.C.Ithmaar BankIthmar CapitalKGL Investment Cayman LTDKipco Asset Management Company (KAMCO)Kuwait Finance and Investment CompanyKuwait Finance House (Bahrain)Lebanon Invest Asset management SALLevant CapitalMalaz GroupMarkazMENA Advisors LimitedMillennium Finance CorporationNational Commercial BankNational Technology Enterprises CompanyNBK CapitalNoor Financial Investment CompanyQatar Capital Partners LLCRasmalaRyada CapitalSabre Abraaj Management CompanySana CapitalShuaa PartnersSociete Tunisienne d’Investissement a Capital Risque (Tuninvest)Swicorp Financial Advisory ServicesThe Carlyle GroupThe GCC Energy Fund Managers LimitedThe National InvestorTuareg CapitalUnicorn Investment BankVenture Capital Bank


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Abraaj CapitalPO Box 504905, Level 7,Emirates Towers OfficesDubai, United Arab EmiratesTel: +971 4-319-1500Fax: +971 4-319-1600

Abu Dhabi Investment CompanyNational Bank of Abu Dhabi Building, Khalidiya, Tariq Bin Ziad Street,P.O. Box 46309 Abu Dhabi, United Arab EmiratesTel: +971 (0) 2 665 8100Fax: +971 (0) 2 665 0575

Abu Dhabi Investment HousePO Box 106699,Abu Dhabi, United Arab Emirates.Tel: +971 2-681-1233Fax: +971 2-681-1844

Al Arabi Investment GroupPO box 143156, Amman 11814Tel: + 9626 55 222 39Fax: + 962 655 190 64

Al Futtain Real EstatePO Box 159, Dubai, UAETel: + 9714 2119 222Fax: + 9714 2119 299

Al Madina Financial and Investment ServicesPO Box 171, Ruwi 112, OmanTel: +968 2-481-8844Fax: +968 2-481-8500

Al Tawfeek Company for Investment FundsPO Box 430,Jeddah 21411,Saudi ArabiaTel: +966 2-617-1003Fax: +966 2-674-4255

Amwal Al KhaleejPO Box 59115, Riyadh, KSA 11525Tel: + 9661 216 4666Fax: + 9661 216 4777

Athar Al Majd HoldingsPO Box 305801, Riyadh 11361, Saudi ArabiaTel: +966 1-211-1515Fax: +966 1-211-1616

Atlas Investment GroupPO Box 143156, Amman 11814, JordanTel: +962 6-552-2239Fax: +962 6-5519064

Attijari Finances Corporation15 bis, Boulevard Moulay Youssef20000, Casablanca, MoroccoTel: +212 22-476435Fax: +212 22-476452

BMCE Bank140 Avenue Hassan II, BP 1342520001 Casablanca, MoroccoTel: +212 22-200325Fax: +212 22-264920

BMG Financial AdvisorsPO Box 52972, 5th Floor, Al Mukmal PlazaPalestine Rd, Jeddah 21573, Saudi ArabiaTel: +966 2-668-1777Fax: +966 2-668-1888

Boubyan BankPO Box 25507, Safat 13116, KuwaitTel: +965 232-5000Fax: +965 245-4263

Byblos BankByblos Bank TowerElias Sarkis Avenue, AchrafiehPO Box 11-5605, Beirut, LebanonTel: +961 1-335200Fax: +961 1-339436


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Concord International Investments9 Hood Al Laban Street, Garden City,Cairo 11451, EgyptTel: +20 2-792-3861Fax: +20 2-792-3864

Citadel CapitalNile Plaza, 1089 Corniche El-Nil Cairo, Egypt Tel: +202 27914440 Fax: +202 2791 [email protected]

CorecapPO Box 66916Dubai, UAETel: +971 4 391 0627Fax: +971 4 390 4361

Corporate Finance House9th Floor, Gefinor Center Block BClemenceau Street, PO Box 113-7008, Beirut, LebanonTel: +961 1-747606Fax: +961 1-747247

Daman SecuritiesP O Box 9436, Dubai, United Arab EmiratesTel: +971 4-332-4140Fax: +971 4-332-4240

Delta PartnersAl Shatha Tower 1,Offices 8-9, 12th floorDubai Internet City, Dubai, United Arab EmiratesTel: +971 (0) 4 369 2999Fax: +971 (0) 4 368 8408

Deutsche BankDubai International Financial CenterPO Box 504902,Dubai, United Arab Emirates.Tel: +971 4-361-1700

Dubai International CapitalPO Box 72888, The Gate, East Wing 13th FloorDubai, United Arab EmiratesTel: +971 4-362-1888Fax: +971 4-362-0888

Dubai Islamic BankPO Box 1080, Dubai, United Arab Emirates.Tel: +971 4-295-3000Fax: +971 4-295-4111

Dubai Ports WorldPO Box 17000, Dubai, United Arab Emirates.Tel: +971 4-881-5555Fax: +971 4-881-1331

EFG-Hermes Private Equity58 Tahrir Street, Dokki, Giza 12311, EgyptTel: +20 2-338-3626Fax: +20 2-338-3616

Emerging Markets Partnership (Bahrain)PO Box 11385, Manama, BahrainTel: +973 17-549333Fax: +973 17-537660

Evolvence CapitalPO Box 31309, Dubai, United Arab EmiratesTel: +971 4-332-4033Fax: +971 4-332-4013

Foursan GroupPO Box 143154Amman 11814, JordanTel: +962 6-562-4562Fax: +962 6-562-4263

Global Investment HouseAl Mirkab, 2nd Floor, Souk Al Safat BldgAbdullah Al-Mubarak Street, PO Box 28807Safat 13149, KuwaitTel: +965 240-0551Fax: +965 240-0661



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Gulf CapitalJSC Fujeira National Bank Tower,15th Floor Salam Street, P.O. Box 27522Abu Dhabi, UAETel +971 2 6942700 ; Fax +971 2 6942703

Gulf Finance HouseAl Salam Tower, PO Box 10006Manama, BahrainTel: +973 17-538538Fax: +973 17-540006

HBG Holdings LimitedLevel 27, Al Moosa Tower II, Sheikh Zayed RoadDubai, United Arab EmiratesTel: +971 (4) 331 4133 ; Fax: +971 (4) 331 4134Email: [email protected]

HSBC Private Equity (Middle East)PO Box 4604,Dubai, United Arab Emirates.Tel: +971 4-507-7333Fax: +971 4-353-4583

Injaz Mena InvestmentsZayed 2nd Street, PO Box 107394Abu Dhabi, United Arab EmiratesTel: +971 2-672-8400Fax: +971 2-672-0011

Injazat Capital PO Box 502009, Dubai Media CityDubai, United Arab EmiratesTel: +971 4-391-1475Fax: +971 4-391-1406

Instrata Capital BSC (c)P.O. Box 26300, Manama, Kingdom of BahrainTel: +973 17388 188Fax: +973 17388 177Email: [email protected]

Intel CapitalBuilding No. 5, Dubai Internet CityPO Box 500032, Dubai, UAE

Investcorp Bank B.S.C.PO Box 5340,Manama, Kingdom of BahrainTel: +973 17532000Fax: +973 17530816

Ithmaar BankPO Box 2820, Addax Tower,10th floor Seef District, Kingdom of Bahrain

Ithmar CapitalPO Box 5527, Dubai, United Arab EmiratesTel: +971 4-282-5555Fax: +971 4-283-1155

Kipco Asset Management CompanyPO Box 28873, Safat 13149,KuwaitTel: +965 805885 ; Fax: +965 241-9611

Kuwait Finance and Investment CompanyP.O. Box 21521, Al Murqab - Altaf ComplexSafat, Kuwait, 13037 KWT Tel: +965889000Fax: +9652420174

Kuwait Finance House (Bahrain)PO Box 2066,Manama, BahrainTel: +973 17-221666 ; Fax: +973 17-221600

Levant CapitalOffice 1301 Fairmont Building,Sheikh Zayed Road,Dubai,UAETel:+97143319788 ; Fax:[email protected]


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Malaz GroupPO Box 66633,Riyadh 11546, Saudi Arabia.Tel: +966 1-460-1644Fax: +966 1-460-0143

MarkazKuwait Financial Centre «Markaz»Universal Tower, Ahmad Al-Jaber St, Sharq, KuwaitTel: +965 2248000 Fax: +965 2425828 Postal Address: P.O. Box 23444, Safat 13095, State of Kuwait

Millennium Finance CorporationDubai International Financial Center, The Gate, East Wing 2nd floor, PO Box 121299, Dubai, UAETel: +971 4-363-4200Fax: +971 4-362-0540

National Commercial BankPO Box 3555,Jeddah 21481, Saudi Arabia.Tel: +966 2-646-4999Fax: +966 2-644-6468

National Technology Enterprises CompanyPO Box 2294,Safat 13023, KuwaitTel: +965 240-6340Fax: +965-240-5926

NBK CapitalPO Box 4950,Safat 13050, KuwaitTel: +965 224-6903Fax: +965 224-6904

Noor Financial Investment CompanyAl-Kharafi Towers, 10th and 11th FloorsOsama Bin Munqes St., QiblaP.O. Box 3311Safat 13034 Kuwait Tel: +965 232-3333 ; Fax: +965 232-3330

Qatar Capital Partners LLCP.O. Box 23109,Doha, QatarTel: +974 494 5474Fax: +974 483 9982

RasmalaDubai International Financial Centre The Gate Village, Building 10, Level 1 P.O. Box 31145,Dubai, United Arab EmiratesTel: +971 4 363 5600Fax: +971 4 363 5635

Ryada CapitalPO Box 29086,Safat 13151, KuwaitTel: +965 491-0191Fax: +965 299-7882

Sabre Abraaj Management CompanyLevel 7, Emirates Towers OfficesPost Box 504905,Dubai, United Arab EmiratesTel.: +9714 319 1500Fax: +9714 319 1600

Shuaa Capital / Shuaa PartnersEmirates Tower Level 28, Sheikh Zayed RoadP.O.Box 31045, Dubai, United Arab EmiratesTel: +971 4-330-3600Fax: +971 4-330-3550

Societe Tunisienne d’Investissement a Capital Risque (Tuninvest)Immeuble Iris, Les Berges de Lac1053 Tunis, TunisiaTel: +216 71-862311Fax: +216 71-862805



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Swicorp Financial Advisory ServicesKingdom Tower, 49th FloorKing Fahd Road, PO Box 2076Riyadh 11451, Saudi ArabiaTel: +966 1 211 0737Fax: +966 1 211 [email protected]

The Carlyle GroupDubai International Financial CentrePrecinct Building 3, P.O. Box 506564Dubai, United Arab EmiratesTel: +971 4 427 5600Fax: +971 4 427 5610

The National InvestorTNI Tower, Zayed Street, KhalidiyaPO Box 47435, Abu Dhabi, United Arab EmiratesTel: +971 2-619-2300Fax: +971 2-619-2400

Tuareg CapitalBahrain (Mailing):Al Matrook Building, Diplomatic Area, PO Box 11544, Manama, BahrainTel: +973 1753 7277

Unicorn Investment BankPO Box 31700, Manama, BahrainTel: +973 17-566000Fax: +973 17-566001

Venture Capital BankPO Box 11755, Manama, Bahrain.Tel: +973 17-514451Fax: +973 17-514441


Zawya is an online business information and community platform focused on the Middle East. Headquartered in Dubai, we serve over 250,000 business professionals.

We help investment professionals understand, monitor and asses opportunities across the region through our Zawya Investor service. The service offers the following features:

• Exclusive live business news from Zawya Dow Jones• Corporate Monitor, with detailed information on 12,000+ companies in the Middle East• Hand picked news, analysis and reports from across the region• Comprehensive stock market data, corporate actions and company fundamentals• Macroeconomic forecasts• All inclusive Monitors covering Private Equity* IPOs Global Sukuk Mutual Funds

*Zawya Private Equity Monitor

Zawya’s Private Equity Monitor covers private equity investments in the Middle East and North Africa, and tracks approximately USD 25 billion in private equity capital, over 80 regional private equity players, and provides information on more than 270 transactions.

Zawya.com

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Qatar Science & Technology Park

Qatar has traditionally been a country that imported its technology and out-sourced its research. A decade ago it set about reversing this situation and transforming itself into a knowledge economy. Qatar Science & Technology Park is helping to deliver that vision.

QSTP is a home for technology-based companies from around the world, and an incubator of start-up enterprises. We offer companies the ideal environment to develop their technology and deliver it to the thriving Middle East marketplace.

That environment includes first-class offices, lab space and support programs dedicated to research and its commercialisation. We are a free-trade zone, making it easy and attractive to establish a technology-based company in Qatar. And most importantly, as part of the renowned Qatar Foundation founded by the Emir of Qatar, we are located alongside campuses of leading universities such as Carnegie Mellon, Cornell and Texas A&M.

QSTP is being implemented and managed by ANGLE Technology. Its support for commercialisation includes «proof of concept» grants for demonstrating the viability of innovations and, in 2008, venture-capital finance for launching tech start-ups in Qatar.

Bringing together innovative companies and world-class resources, QSTP is a place where research goes to work.

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Saudi Aramco is the fully integrated, global petroleum enterprise of the Kingdom of Saudi Arabia. The company has operations in exploration, production, refining, marketing and international shipping. Building on a legacy of reliability and innovation that dates back almost 75 years, Saudi Aramco today is among the world’s leaders in the production of crude oil and natural gas, and the exporting of crude oil and natural gas liquids. The company will celebrate its 75th anniversary during 2008.

Established by Royal Decree in 1988, Saudi Aramco assumed the responsibilities of its predecessor, the Arabian American Oil Company (Aramco), whose origins date back to the original 1933 oil concession granted by King ‘Abd al-‘Aziz Al Sa’ud. During the 1970s, the Saudi Government purchased Aramco in stages from its original owners, a consortium of U.S. oil companies, acquiring 100 percent of the assets by 1980.

The company manages about one-quarter of the world’s proven conventional oil reserves, about 260 billion barrels, the most of any company in the world. Since it first found crude oil in commercial quantities in Saudi Arabia’s Eastern Province in 1938, the company has discovered about 90 oil and gas fields throughout the Kingdom and in its offshore waters. More than one-fourth of the discoveries have been made since 1989. In 2006, Saudi Aramco produced an average of 8.9 million barrels per day (bpd) of crude oil, and is developing new increments to increase its sustainable production capacity to 12 million bpd by the end of 2009. The company manufactures and markets a wide range of petroleum products from oil and gas, both domestically and internationally.

Saudi Aramco’s five domestic refineries are at Ras Tanura, Riyadh, Jiddah, Rabigh and Yanbu’. Its refining and marketing partnerships in Saudi Arabia are Saudi Aramco Mobil Refinery Co., Ltd., (SAMREF) in Yanbu’ and Saudi Aramco Shell Refinery Company (SASREF) in Jubail. Saudi Aramco has international affiliations with Motiva Enterprises LLC in the United States, S-Oil Corporation in the Republic of Korea, Petron Corporation in the Philippines, and Showa Shell Sekiyu K.K., in Japan. The company has a total worldwide refining capacity of almost 3.7 million bpd and is expanding that capacity domestically and internationally through joint and equity ventures. PetroRabigh, Saudi Aramco’s joint venture refining and petrochemical complex with Sumitomo Chemical Co. of Japan, is scheduled for start-up on the Kingdom’s Red Sea coast in 2008. There are also two joint ventures, Quingdao and Fujian, under development in China.

The company’s Master Gas System is one of the largest gas gathering, processing and distribution networks of its kind in the world. Gas used as both fuel and feedstock is a major factor in the country’s diversification and economic development activities. Saudi Aramco also owns and operates the Kingdom’s nationwide petroleum product distribution network.

For more than seven decades, Saudi Aramco has reliably supplied energy to the world, and is dedicated to fulfilling this commitment well into the future.

Saudi Aramco

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Abraaj Capital

Abraaj Capital is the premier investment firm specialising in private equity investment in the Middle East, North Africa and South Asia (MENASA) region. The management team has brought together some of the most compelling and successful transactions in the history of leveraged acquisitions across the region.

With USD 5 billion of assets currently under management, Abraaj has pioneered institutionalizing private equity practice in the region and is setting trends and benchmarks for others to follow.

Winner of industry awards including ‘Middle East Private Equity Firm of the Year’ from Private Equity International (2006 & 2007), the Banker Middle East Award for ‘Best Private Equities Institution’ in 2006 and for ‘Outstanding Contribution to Financial Services in the Middle East’ in 2007 and ‘Best Private Equity House’ at the World Private Equity Awards, MENA in 2007. Arabian Business recognized Abraaj among the 50 Most Admired Companies in the GCC in 2007. Abraaj is also the first pure private equity firm to be registered by the DFSA to operate out of Dubai International Financial Centre (DIFC).

Apart from managing its six private equity funds, Abraaj Capital Holdings Limited (ACHL) itself is extremely well capitalized, with an issued share capital of USD 1 billion. Its 133 professionals come from 27 nationalities and achieve a coverage that spans the MENASA region.

For more information please visit www.abraaj.com

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Abu Dhabi Investment Company

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Abu Dhabi Investment Company (ADIC), the first investment company in the United Arab Emirates, is one of the leading financial services firms in the region. Established by Emiri Decree on February 24, 1977, the company was majority owned by Abu Dhabi Investment Authority (ADIA) and National Bank of Abu Dhabi, before ADIA’s shares were transferred to Abu Dhabi Investment Council in 2007.

Since 1977, ADIC has delivered excellence in treasury and credit services, loan syndication, equity and debt underwriting, financial advisory, asset management and brokerage across a range of asset classes. As a result, we have earned a reputation for professionalism, integrity, innovation and market knowledge.

Pursuing a focused approach, ADIC today leverages its investment expertise across four strategic areas: Asset Management, Private Equity, Real Estate and Infrastructure. In this way, we are able to offer targeted products and services to meet specific client requirements in markets across the globe, all while delivering superior risk-adjusted returns.

With extensive knowledge of the Middle East and North Africa investment environment; unrivalled access to primary information on regional companies, both large and small; an understanding of the micro and macro economic environment and track record across asset classes, ADIC is an ideal investment partner for institutions and high net worth individuals based in the region and beyond.


Over the past 300 years, Barclays Bank has built one of the largest financial services institutions in the world. Operating in over 60 countries and employing 127,000 people, we move, lend, invest and protect money for over 27 million customers and clients.

Our aim is simple: to create value for our customers and clients. We offer a full range of services, including retail, corporate and private banking, credit cards, investment banking, investment management and wealth management.

Within the Gulf region, Barclays has been a member of the UAE business community for more than 30 years. We continue to invest heavily in the region and expand the range of services offered to our customers and clients here.

Our commercial clients range from multinational subsidiaries to regional and domestic Gulf corporations. Our service teams, based in Dubai and Abu Dhabi, create value for our clients by combining in-depth local market knowledge with Barclays global reach. Services include cash management, trade finance, structured project and property finance, and leveraged finance.

Our Dubai-based leveraged finance team works closely with our established leveraged finance operations in Europe, and specialises in structuring and arranging debt in support of buy-outs in the GCC region.

Barclays Capital, our investment banking division, provides large corporate, government and institutional clients with a complete range of financial products and services, including bonds, collateralised finance, derivatives, equity products, futures and securitisation. With the regional base in the Dubai International Financial Centre, Barclays Capital is a part of an international network of offices in 26 countries, giving us virtually unlimited global reach and enabling us to meet the needs of our clients within the UAE and throughout the Middle East and North Africa region.

Barclays Capital’s expertise and excellence have been recognised by a number of the industry’s most prestigious awards, including Financial News magazine’s ‘European Investment Bank of the Year’ in November 2005 and IFR magazine’s ‘Bank of the Year’ in January 2005.

Contact Details:

Lars Lind Director Head of Barclays Leveraged Finance UAE & Gulf E-mail : [email protected] Direct : +971(0)4 509 8106Fax : +971(0)4 357 0975Mobile : +971(0)50 453 9766 Address : P.O. Box 1891, Khaled Bin Waleed Street, Dubai, UAE Registered in England and Wales (registered no. 1026167).Registered Office: 1 Churchill Place, London, E14 5HP, United Kingdom

www.barclays.uae / www.barclays.com

Barclays

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Citadel Capital

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Citadel Capital: The Art of Value Creation

Citadel Capital is a Cairo-based private equity firm focused on acquisitions, turnarounds and greenfields in the Middle East and North Africa. The firm has capitalized on key opportunities in sectors including oil and gas, cement, mining, transportation and, most recently, a strategic foray into the foods sector.

With USD 8 billion in investments currently under control, Citadel is committed to creating value for its shareholders. The firm, formed in 2004 as a two-person partnership, is now a thriving regional practice with six managing directors, a proven track record of value creation and an expanding geographic footprint. The firm carefully selects investments for their potential to create value and spur market growth. By focusing on “deals that make sense,” Citadel Capital strives to earn the respect of regional industry veterans and global giants alike. With each acquisition, the firm engineers opportunities to turn local companies into regional players. That strategy has paid off for Citadel Capital’s co-investors in successful deals including EFC (Egyptian Fertilizer Company) and ASEC (Arab Swiss Engineering Company). Citadel-led restructuring allowed each to ramp up its production capacity and join the ranks of top regional players within a short period of the initial investments.

Citadel Capital prefers to focus on larger investments with total value of at least USD 100 million and clear exit strategies. The firm co-invests with its clients in every deal, thereby sharing equally in risks and returns. Citadel Capital aims to be a trusted partner of the communities in which it operates, building employee stock ownership plans into its transactions and investing in local development initiatives through its corporate social responsibility programs, which focus heavily on education.


Delta Partners is a Dubai-based, integrated advisory and investment firm focused on Telecom, Media and Technology (TMT) in high growth markets. We deliver value to our clients and investors through exclusive sector focus and the synergies of our three different business lines: Advisory, Corporate Finance, and Private Equity.

Our Advisory practice partners with C-level clients in telecom operators, vendors, and other TMT players to help them address key strategic issues affecting their business. Our Corporate Finance team has already been involved in several telecom transactions in the region, offering a differentiated value proposition to buyers and sellers leveraging our in-depth industry expertise. Delta Partners is also managing its USD 80 million Delta Partners MENA Telecom Fund, a Private Equity fund targeting telecom investment opportunities in the Middle East and North Africa.

At Delta Partners we believe our integrated business model is truly unique and offers significant value to both our fund investors and investee companies at each stage of the investment cycle. Through our advisory practice, we are working with telecom clients in over 15 countries in the Middle East and Africa, which give us unparalleled access to deals across the region. Our deep understanding of industry trends and dynamics enable us to make superior investment decisions and reduce risk. Finally our industry focus allows us to take a more hands-on approach with investee companies helping them take key strategic decisions to ensure high growth.

Delta Partners MENA Telecom Fund is currently looking for investment opportunities in companies seeking growth capital within the different sub-verticals of the TMT sector across Middle East and North Africa.

For more information please contact us at [email protected].

Delta Partners

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Global Investment House

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Global Investment House “Global” has a successful private equity fund management business backed by one of the largest teams in the MENA region with more than 30 well qualified professionals. The team members have diverse sector experience and have worked in countries across the MENA and South Asia. The team has an aggregate work experience of over 200 years.

Global has been in the private equity space since 1999, and holds a highly successful track record. The private equity fund management team was formally defined in 2005, and in a rather brief period of 3 years, the team came to managing USD 1.6 billion through 4 private equity funds, namely, Global Private Equity Fund, Global Opportunistic Fund, Global Opportunistic Fund II and Global Buyout Fund L.P. Global Buyout Fund, the largest buyout fund in the region, was awarded the “Best Fund of the Year 2007” at The Private Equity World Awards, MENA.

The team has invested near USD 1 billion across 47 transactions across 14 sectors in MENA, Turkey, South Asia & China during the past 3 years. Its core competency lies in developing, investing and successfully exiting private equity investments in the MENA with special focus on the GCC member countries across diversified sectors including financial services, real estate, education, healthcare and hospitality. It has also been successfully investing in Turkey, India and China.


Gulf Capital is a leading regional investment company, focused on the GCC and MENA Region.

Incorporated in early 2006 as a Private Joint Stock Company (Pvt. JSC) in Abu Dhabi, Gulf Capital has raised AED 1,225 Billion (USD 330 Million) from 300 of the most prominent businessmen, institutions and families in the GCC.

Gulf Capital seeks to acquire sizeable or controlling stakes in profitable and rapidly growing companies with high quality management, particularly those that can retain a sustainable competitive advantage. The group seeks to invest in a select number of growing industries, notably those that are undergoing consolidation. Gulf Capital is rapidly emerging as a leader in the Middle East private equity industry, with a mission to enhance shareholder value through partnering with portfolio companies to achieve exceptional growth.

Gulf Capital

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Injazat Capital

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Injazat Capital Limited is a leading asset management and investment banking financial institution, delivering innovative solutions to institutional and individual investors.

Registered in the renowned Dubai International Financial Centre, and regulated by Dubai Financial Services Authority, Injazat Capital delivers a range of Sharia compliant financial services that include fund management, investment banking, corporate advisory and other innovative financial services.

Private Equity Fund Management Injazat Capital focuses on providing Private Equity Fund Management Services to our investors through a regulated fund structure. Our funds are regulated as Collective Investment Schemes (“CIS”) under the Bahrain Monetary Authority (“BMA”), Dubai Financial Services Authority (“DFSA”), or another recognised regulatory environment.

Investment BankingInjazat Capital structures and executes diverse and innovative public and private market transactions for corporations, financial institutions and governments. We provide our clients with the broadest possible range of opportunities in the Middle East and North Africa Region. Our global relationships, coupled with our unique understanding of local economies, industries and cultures, help us consistently deliver high quality advice and service time.

Origination and Raising FundsInjazat Capital offers origination and capital raising services to corporations and governments regionally. Our Origination team has the insights and relationships to deliver world-class private funding. Having in-depth understanding of client needs as well as the market, industry and business environment, we design customised solutions and provide our clients with access to high-quality private and strategic investors regionally.


Ithmar Capital is a GCC focused private equity specialist, managed by a highly experienced team of industry leaders, with local and international expertise and connectivity.

From its offices in Dubai and London, Ithmar Capital targets exceptional growth capital and buyout opportunities throughout the GCC region and overseas, provided the GCC region represents a strategic market for the overseas companies.

Ithmar Capital is actively committed to using its high profile regional partnerships and international connectivity to strongly support the success of its portfolio companies.

Ithmar Capital is the first regional private equity specialist that has entered into a strategic alliance with global private equity leader – 3i. The partnership combines local and regional knowledge and network with true global reach and expertise.

With a focus on innovation, Ithmar Capital is at the cutting edge of its industry, always looking at new ways of adding value to its partners and portfolio companies.

Ithmar Capital is currently managing proprietary investments in excess of $ 500 million in some of the most attractive sectors in the region such as oil and gas, construction, healthcare and education, and is planning to launch its third fund, (Ithmar Fund III) targeting $1Billion by the 2nd half of 2008.

Ithmar Capital’s vision is to be the leading regional private equity firm in terms of conduct and return.

For further information please visit Ithmar Capital online at: www.ithmar.comor contact: Nada Lotfy, Marketing Director, Ithmar Capital Tel: +971 4 282 5555

Ithmar Capital

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NBK Capital

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NBK CAPITAL The Leading Middle East Investment Bank

NBK Capital is one of the leading investment banks in the Middle East. With offices in Kuwait, Dubai, and Istanbul, NBK Capital is strategically placed to offer a broad range of services including investment banking, merchant banking and investment services. Established in 2005 a wholly owned subsidiary of NBK, the largest Kuwaiti bank and the highest-rated in the Middle East, NBK Capital has focused on providing the highest quality investment services to its clients and investors. In its relatively short history, NBK Capital has managed to establish a name for itself through several major deals in various areas of the business. The Investment Banking group, which provides M&A and financing advisory, has been involved in two of the largest regional M&A deals in 2007 amounting to over USD 2 billion. These deals include NBK’s acquisition of Al-Watany Bank of Egypt and the National Commercial Bank’s acquisition of Turkiye Finans. The Merchant Banking group has also made notable strides including the first exit for the NBK Capital Equity Partners Fund resulting in a 2.8x cash-on-cash return in only 9 months. In addition, NBK Capital launched two new funds including a mezzanine fund and a Kuwait offset fund which will be fully operational in 2008. The Investment Services group manages 30 investment funds with assets under management exceeding USD 10 billion. The funds are diversified into several areas including Money Markets, Equities, Islamic, Alternative Investments, and Real Estate. To provide investors with complete investment solutions, the Investment Services group at NBK Capital also provides research, brokerage, and asset management services.

The achievements of NBK Capital thus far demonstrate our commitment to hire the brightest talent in the region and deliver the highest quality products to our clients and investors.


SHUAA Partners Ltd, is the private equity arm of SHUAA Capital psc. SHUAA Partners follows a systematic investment process that is based upon the following principles: • Pro-active generation of deal flow • Comprehensive due diligence • Innovative transaction structuring • Disciplined valuation approach • Continuous investment monitoring and value creation post-acquisition • Careful exit planning SHUAA Partners will identify and partner with experienced industry veterans in pursuit of investment opportunities. Operating executives will be instrumental in the origination and due diligence processes. In addition, SHUAA Partners’ partnership with the Operating Executives will enhance the Fund’s credibility with business owners and management teams. Operating Executives also play a role building value post-investment, typically assuming the role of portfolio company senior management. The Fund will seek Operating Executives who have demonstrated success in guiding rapidly growing companies and integrating acquisitions to achieve operating results consistently better than industry averages. Its inaugural fund, SHUAA Partners Fund I, L.P., held its final closing in September 2005 with commitments of USD 200 million. While its second fund, Frontier Opportunities Fund I, L.P., held its final close in October 2007 with commitments of USD 100 million. SHUAA Partners is regulated by the Dubai Financial Services Authority (“DFSA”) and is incorporated in the Dubai International Financial Centre (“DIFC”) as SHUAA Partners Ltd.

SHUAA Partners Ltd.

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A96

The National Investor (TNI)

The National Investor (TNI)

The National Investor (TNI) is a privately owned regional investment and merchant banking group. The firm comprises six strategic business units covering investment banking, private equity, asset management, real estate, principal investments and investment research. In addition, the firm has an associate company, Gulf National Securities Centre (GNSC), which provides brokerage services as a registered member of the Abu Dhabi Securities Market and the Dubai Financial Market.

As a regional firm, TNI operates from Abu Dhabi and Dubai in the UAE and Riyadh in Saudi Arabia. The firm provides a wide range of investment, advisory and fund management services to a substantial client base that includes listed and unlisted companies, financial and government institutions, and high net worth individuals.

Over the last 14 years, TNI successfully positioned itself amongst the region’s most trusted and reputed financial institutions. With a proven track record across all of its lines of business, the firm ranks as the leading arranger of public share offerings with total transaction value exceeding AED 11 billion.

Private Equity

TNI’s private equity practice is one of the oldest and most respected private equity franchises in the GCC. Started in 1994, TNI has made over two dozen investments so far, and has generated an impressive realized IRR of 38% on its private equity portfolio over a 14-year period. In recognition of its performance, TNI received the award for “Best Institution for Private Equity” from Banker Middle East in May 2005.

TNI’s Private Equity Group is uniquely able to leverage its business relationship network and the local and regional resources of the firm for the benefit of existing and prospective portfolio companies. TNI’s PE professionals have a diverse mix of backgrounds including private equity, mergers and acquisitions, leveraged finance and corporate restructuring. These professionals operate out of TNI’s DIFC-based offices in Dubai, as well as Abu Dhabi and Riyadh.

The firm launched the TNI Growth Capital Fund (GCF), L.P., a targeted private equity fund focusing on late stage growth capital opportunities in the GCC, North Africa, Levant and Asian subcontinent. The fund completed its final closing in December 2007 and has currently three portfolio companies. Going forward, the firm intends to launch multiple industry-focused fund products focusing on mid-market opportunities.

gulf venture capital association- private equity in the middle east 2007

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