Private equity investments into MENA reach Dhs 1.5bn in 2014

The value of private equity investments in the Middle East and North Africa region surged 118 per cent to reach Dhs 1.5bn in 2014, the highest level recorded since 2008.

According to a report released by the non-profit MENA Private Equity Association, the investment activity in the region grew significantly last year as economic conditions rebounded.

The report also noted that the year 2014 saw the highest levels of investment values and fund raisings since 2008.

Total number of funds raised in 2014 reached $1,2bn last year compared to $744m in 2013.

Sectors such as oil and gas, education, services and food and beverage were the most attractive areas for investment last year, the report noted. Meanwhile consumer driven industries such as retail, healthcare and consumer goods also garnered interest from investors.

Information technology businesses saw the largest number of transactions as venture capital investors continued to target the sector, the report noted.

Geographically, the United Arab Emirates and Saudi Arabia attracted over 75 per cent of MENA investments by value last year. Egypt also saw the value of investments doubling in 2014, compared to 2013 as the Arab country became more stable politically.

“Private equity has permanently established itself over the past decade as a mainstay in the regional financial market as it successfully overcame several economic and political crises,” said the managing director at CedarBridge Partners and a member of the association’s steering committee Imad Ghandour.

“It has now several well established players focused on funding and nurturing tens of young companies of all sizes and in all sectors. Its impact on the development of the regional private sector is increasingly being felt as such companies blossom into strong regional and global operators, each in their respective field.”

The report was also optimistic on the region’s long-term prospects in attracting private equity capital.

It indicated that a strong demographic profile, relative economic stability, increasingly developed entrepreneurial outlook and underlying liquidity supported the growth of the private equity and venture capital industry in the region.

MENA markets, although still evolving when compared to developed markets for private equity investors, are attractive to global players due to their strong economic potential, experts say.

According to an IMF forecast, the MENA region is slated to be the third fastest growing region in the world over the next five years.