European PE Firm CVC Eyes $700m Deals In Middle East, North Africa

Currently, around 25 per cent of the firm’s funds come from Asia and the Middle East.



European private equity firm CVC Capital Partners is looking for deals in the Middle East and North Africa (MENA) with a price tag around $700 million, its co-chairman said on Tuesday.

However, Steve Koltes declined to comment on a potential joint bid with peer KKR & Co for a majority stake in Kuwait Food Co, better known as Americana.

“Americana benefits from a lot of trends you see in the region — growth of the young population and, unfortunately, eating habits that are changing for the worse,” Koltes told reporters on the sidelines of an investment conference in Dubai.

Having shown limited interest in the region’s private equity space, Western firms are becoming more involved in MENA dealmaking as activity picks up after a fallow period in the wake of the global financial crisis and the number of companies of a size that would draw in international players grows.

U.S. firm Blackstone Group made its first investment as part of a group which took a minority stake in United Arab Emirates-based GEMS Education, it was announced last week, while rival TPG Capital is close to its maiden transaction, in partnership with Abraaj, for Saudi fast food chain Kudu.

A target deal size of around $700 million means that opportunities for CVC to invest have so far been limited, according to Koltes.

“We have looked at a few (assets) in the region and we’ll continue to do so,” he said, adding the consumer sector and parts of the economy further from government influence were most attractive to the firm.

“(The) Emirates is one thing but … Egypt, Morocco are places with very good demographics and prospects, which just need more stability and more wealth.”

While it may not have been an active dealmaker in the MENA region, CVC has raised a lot of cash from local investors to be deployed elsewhere, with around 25 per cent of its funds now coming from Asia and the Middle East.

“We have had a very loyal following from very big investors in the region for a very long time and that continues. They have assets and no liabilities, unlike U.S. pension funds, so it’s a very interesting market for us to raise money from,” he said.

CVC has total worldwide assets under management worth $70 billion.