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Private equity players in the Middle East face a major challenge. With an estimated US$11 billion in un-invested funds raised before the global financial crisis in 2008, PE firms in the region are under mounting pressure to find and make meaningful investments.
At the height of the PE industry in the region between 2005 and 2007, there were about 70 transactions a year, with an average size of US$30 million. Using this yardstick, it would take more than five years to invest these funds.
As PE investment firms have to invest their existing funds before they can raise additional capital, there are some concerns that deals may be done “at almost any price” despite weak investment opportunities, according to a new report based on a joint survey of PE investment firms and investors by INSEAD and management consultancy Booz & Company. However, the same report highlights that the industry has drawn important lessons from the crisis and most private equity firms or general partners (GPs) are expected to exercise stronger investment prudence and proper due diligence. This may explain the recent focus on SME investment by some top companies.
To read the full, original article click on this link: Private Equity; Middle East
Author: Kevin Tan
