Abraaj Capital Eyes $2 Billion in Deals Next Year

DUBAI (Reuters) – Private equity firm Abraaj Capital sees $2 billion worth of deals in 2009 as it looks to benefit from lower valuations across the Middle East, North Africa and Asia, an executive said on Tuesday.

“Our pipeline is comfortably over $2 billion … although not all deals may be completed,” said Executive Director Tom Speechley speaking at the Reuters Middle East Investment Summit. “We are thematic rather than sector-oriented.”

In 2008, Abraaj made a slew of investments ranging from stakes in a Pakistani energy firm to an Egyptian medical services firm but no finance company.

“We are currently in a period where sellers are being forced to adjust expectations and 2009 looks to be promising.”

Speechley said the private equity firm is especially interested in healthcare, education, agribusiness, transport and logistics.

Abraaj, which manages about $5 billion in assets, said earlier this month it had raised nearly $3 billion for a buyout fund and considered the Middle East and North Africa as offering a “competitive advantage.”

The firm, which owns a stake in low cost airline Air Arabia AIRA.DU, will “rely” on its regional investor base in the future, but is seeing increasing interest from the international investment community, Speechley said.

“We had one of the largest pension funds in our office a few days ago … for us it is a strategic decision to open up to the world and when blue chips come to see us it puts us to the test,” said Fred Sicre, also an executive director at Abraaj.

The Dubai-based firm bought a controlling stake in the parent company of Karachi Electric Supply Co. (KESC.KA: Quote, Profile, Research, Stock Buzz) in October as it looks to tap into the world’s seventh largest city.

“You are dealing with a monopoly,” Sicre said. “We saw a good opportunity for making a good return for investors and of doing good as well.”

Speechley said the private equity firm had no plans to sell shares to the public, dismissing reports late last year that it planned an initial offering and may use the funds to buy a Mideast financial firm.

“We never had an IPO on the cards, it was media speculation. We still don’t have plans to do an IPO yet,” he said.

The Gulf Venture Capital Association estimates there were $25 billion (Dh91.8bn) in private equity funds invested in the Gulf last year, up from roughly $21bn in 2006.

The Abraaj executives said the regional private equity industry has suffered from too much hype and there were probably more companies in the field than justified by the amount of business.

“There’ll be a slowdown in the number (of new firms),” said Sicre. “There is a certain amount of hyperbole within the industry.”

By John Irish and Amran Abocar
(Addition reporting by Thomas Atkins, Lin Noueihed and Jason Benham; Editing by David Cowell)