Mid-East Firm SHUAA Holds 1st Closing Of Debut Fund
By Marine Cole (Reporter/The Private Equity Analyst/Dow Jones)
7/8/2005 – SHUAA Partners, the private equity arm of investment banking institution SHUAA Capital PSC, said it has held the first closing of its first private equity fund with $160 million, putting the fund ahead of its $150 million target already. The firm is one of several that is capitalizing on booming interest in private equity in the Middle East.
Abe Saad, managing partner at SHUAA Partners, told LBO Wire the firm anticipates closing SHUAA Partners Fund I LP at the end of August at its hard cap of $200 million.
"We raised the money very quickly," Saad said. "We really got over-subscribed. We could have raised half a billion but it's a first fund, we wanted to keep it small. I'd rather raise $200 million and raise another fund sooner."
Dubai-based SHUAA Partners, which began fund-raising in April, held its first closing on June 23 with 21 limited partners, "the ‘who's who' in the Middle East in terms of institutions and high-net-worth individuals," said Saad, although he declined to name any investors. He previously served as a principal in the buyout group at Allied Capital Corp., and has also worked for The Carlyle Group.
Saad said a combination of factors are making the Middle East an attractive place for private equity these days.
The increase in oil prices has brought more money to the pockets of Middle East-based investors. At the same time, investment opportunities have increased, as government-owned institutions go private, family-owned businesses look for succession strategies, and expatriates move to sell their business and to go back home, according to Saad. In one recent example, private equity firm Abraaj Capital acquired 80% of Jordan Aircraft Maintenance Ltd. in January from Royal Jordanian Investment Ltd. for $55.1 million. The Jordanian government-owned airline, Royal Jordanian, retains 20% of the now-privatized aircraft maintenance company.
Exit opportunities are also on the rise, as the IPO markets, especially in Saudi Arabia and the United Arab Emirates, have been booming. Many IPOs have been wildly oversubscribed; the April offering of oil services provider Aabar Petroleum Investments Co. PJSC in the UAE was oversubscribed by a record 800 times.
"The Middle East has always been a great source of cash to invest in the U.S. and in Europe," Saad said. "Now there's more money flowing in the area and it's creating a boom in private equity."
There are limitations, of course. Saad said the market isn't anywhere near mature, and opportunities for deals are much more limited than in the U.S or Europe.
SHUAA Partners made the conscious decision not to approach U.S. investors for its first fund. It might consider them for its next fund, though. "You need to build a track record to go to U.S. investors," he said.
Saad anticipates SHUAA Partners will typically invest between $5 million and $50 million in buyouts, recapitalizations, private investments in public equity, spin-offs from business restructurings and privatizations, public to private transactions, acquisitions and pre-initial public offering investments.
The firm will focus on the countries of the Arabian Gulf Cooperation Council: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. Saad added that the fund will also invest in Egypt, Jordan and Lebanon "on an opportunistic basis."
SHUAA Partners made its first investment on June 8 when it invested about $33 million in Damas, acquiring a 10% stake in the UAE-based jewelry firm.
The firm anticipates it will make six to eight main investments over the next four years, Saad said, but "we hope it's going to be quicker."
SHUAA Partners was previously investing its own money with a $55 million fund called Menavest, which is co-managed with Capital Trust Middle East, part of merchant bank Capital Trust Group, London. SHUAA Partners has focused on the Middle East and North Africa and has also occasionally purchased assets in Europe and the Far East.
Saad said SHUAA Partners competes mainly with HSBC Holdings Plc's HSBC Private Equity, as well as with Abraaj Capital Ltd. Abraaj recently made the last investment out of its first buyout fund, a $116 million fund, when it took a 40% stake in the Arab Web portal Maktoob.com in June. Abraaj is currently raising its second buyout fund, targeting $500 million.
SHUAA Partners' team also includes Iyad Duwaji, chief executive of SHUAA Capital and member of the fund's investment committee; Jamil Brair, assistant vice president of SHUAA Partners; Ahmed Ozalp, senior associate of SHUAA Partners; Kerim Mitri, chief financial officer of SHUAA Capital and member of the fund's investment committee; and Gary Feulner, legal counsel of SHUAA Capital and member of the fund's investment committee.
SHUAA Capital also offers investment banking, portfolio advisory services and asset management.
Reach SHUAA Partners at 971-4-330-3600
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