The Arabian Gulf's private equity market remains underdeveloped, according to a landmark thought-leadership report.

The report ' The Impact of Private Equity on the GCC' is produced by Ithmar Capital, the GCC-focused private equity firm and Dow Jones, a leading provider of global business news and information services.

The report - the first in a twice-yearly series - tracks the impact of private equity on the GCC.

The initial impact report maintains: 'The private equity market in the GCC is currently underdeveloped compared to other geographies and accounts for only a small proportion of the region's overall economic activity.

'Fundraising in the GCC area reached $10 billion in 2006, accounting for just under a third of the total $33.2 billion raised across the emerging markets of Asia, Eastern Europe, Latin America and the MENA region,' the report added.

And in a bullish forecast, the report says private equity in the GCC is expected to grow as a result of rapid economic growth and restructuring, high liquidity from record energy prices, significant fiscal and trade surpluses and heightened interest in the region from international firms looking to hedge investment risks and compete globally.

The thought-leadership report provides an in-depth analysis of private equity in the GCC, its effects on regional economies and the future outlook, taking into account the lessons learned from previous scenarios in mature markets, such as Europe and the US.

'The input of this select focus group delivers tremendous value and expertise, and brings a multi-dimensional approach to assess where precisely the private equity industry in the GCC is heading,' said Ithmar's co-founder and managing partner Faisal Belhoul.

'The report constitutes a landmark in the understanding of the impact of a specialised asset class on a rapidly developing region, and the informed views and expertise it contains afford a real insight into future regional industry direction,' he added.

The initial impact report features interviews with select regional decision-makers including CEOs, family business owners and industry leaders.

The report series will chart the growth of private investment and fundraising in the Middle East, identify economic driving factors, quantify liquidity levels and fundraising, assess sectors of interest and outline investment challenges.

'As the private equity sector is still in the early stages of development in the GCC, there are tremendous opportunities in areas such as industry consolidation, cross-border expansion and buy-and-build scenarios but there needs to be a greater understanding of the possibilities to bring these to fruition. This report will go some way to addressing the knowledge gap and empowering solid business decision going forward,' said director, Ithmar Capital, Ranjit Bhonsle.

Over recent years private equity has gained increasing acceptance as a means of financing growth, adding value and aiding the transformation of family-owned businesses to more corporate concerns.

'This unprecedented growth requires greater understanding of the industry, and a lack of discernable information in the market makes it increasingly difficult for investors and other stakeholders to make educated decisions,' said director of Global Research, Dow Jones Jessica Canning.

Copies of the report are available at Ithmar Capital or electronically via the company's website - ithmar.com.Trade Arabia News Service