US private equity firm Carlyle Group is working on up to five deals in the Gulf region and expects many opportunities to come from Saudi Arabia, the company's managing director for the region said.

Saudi Arabia, which accounts for more than half of the Gulf's economy, continues to attract foreign investors with the government's pledge to invest billions in infrastructure projects.

Carlyle is currently working on several deals in the Middle East in such sectors as oil and gas, chemicals, industrials, and food processing, which include four to five deals in the Gulf region, Firas Nasir, managing director in the Middle East and North Africa for the group, said.

"Saudi Arabia is going to have the lion's share of the opportunities we're looking at," he said.   

Private equity firms in the Middle East are sitting on an estimated more than $10 billion in cash and deal activity is expected to pick up again after coming to a virtual standstill last year.

"The investment environment is much more favourable. Valuations are still not cheap, but at least they are reasonable, and we have the benefit of having a lot of dry powder to make new investments," Nasir said.

Carlyle, which has nearly $90 billion of assets under management, raised $500 million in 2009 for its first Middle East and North Africa (Mena) fund, of which just under half has been used for a stake in Saudi Arabia's General Lighting Company and two other deals in Turkey, TVK Shipyard and Medical Park, Nasir said.

The firm said on Tuesday it had bought a 30 percent stake in General Lighting Company, Saudi Arabia's largest lighting fixture manufacturer, the group's first investment in the Gulf's largest economy.

Carlyle is likely take General Lighting Company public in the next few years, Nasir said. "We believe there will be a good IPO story for the public shareholders," he said. - Reuters