UAE, Egypt top private equity investments in Mena
Dubai, July 15, 2014
The UAE and Egypt led the number of investments in the Mena region last year with 20 per cent each, followed by Lebanon with 18 per cent, according to a recent report.
The ‘Mena Private Equity and Venture Capital’ annual report released by Mena Private Equity Association, a non-profit organisation supporting and developing the private equity and venture capital industry in the Mena region, was compiled in collaboration with KPMG and Zawya Thomson Reuters.
It presented a detailed review of the private equity and venture capital arena in light of the uncertainty and continued challenging environment across the region.
The report highlighted that the total number of private equity investments had decreased to 66 last year from 101 in the previous year. The average investment size has been stable at $15 million with a continued focus on venture capital, growth capital and SME investments.
The funds raised saw a decline from $863 million in 2012 to $744 million last year, said the report. However, the average close per fund increased to $74 million as compared to $43 million in 2012, reflecting the consolidation trend among funds where fewer funds are able to raise bigger amounts.
The fundraising community in the Mena region remains optimistic to close the funds announced last year worth $2.6 billion, it said.
The report found that information technology, media, telecoms (TMT) and healthcare sectors have seen an increased volume of investments.
IT accounted for 30 per cent of total investment volume last year with the majority as venture capital, while other sectors such as oil and gas, and healthcare accounted for nearly 26 per cent of the total investment.
However, construction, real estate and finance services saw a drop with continued challenges for the financial services sector during the year.
The number of exits completed during the year decreased, with the number of divestments expected to increase in the short- to medium-term, said the report.
Imad Ghandour, managing director at CedarBridge Partners and a member of the association’s Steering Committee, said: “The private equity activity in 2013 continued to be impacted by the sequence of the crises in the region starting with 2008 and until today. Nevertheless, the fact that the industry can still raise and successfully invest hundreds of millions every year is a testimony of resilience of the industry in an adverse environment.
“I am optimistic that 2014 will reflect a healthier level of activity as witnessed by the amount of funds closed, investments made, and exits realised in the first half of 2014.”
Vikas Papriwal, partner and UAE country head for Private Equity and Sovereign Wealth Funds at KPMG, said: “2013 continued to be a challenging year for the PE and VC industries in the region. While the industry in general continued to invest cautiously favouring the non-cyclical and defensive sectors, such as oil and gas and healthcare, investors are increasingly broadening their focus across a range of sectors including food and beverage and leisure and tourism - the two largest sectors of investment by value during 2013.”
“The medium- to long-term outlook for the PE and VC industries in the region is positive. With the ongoing slowdown of the more mature markets in the West, the Mena region is likely to remain the region of opportunities and a hub for private equity as its strong macro-fundamentals continue to drive the region’s economic recovery,” he added. - TradeArabia News Service