Private equity funds in the Middle East and North Africa raised less than $1 billion last year, a fall of a fifth compared to the previous year.
The lacklustre fundraising was due to economic headwinds, geopolitical factors and the absence, for some funds, of a long enough track record, according to the MENA Private Equity Association, a trade group that has produced an annual report on the region’s private equity sector for the past ten years.
Although the report authors recorded an increase in the number of disclosed investments by private equity funds last year, the sum invested fell 5% compared to the previous year to less than $1.5 billion.
The report predicted further challenges for the region’s private equity industry because of low oil prices and a perceived gap in pricing expectations between buyers and sellers. Private equity firms will struggle to achieve good valuations when exiting their investments, warned the report.
However, Helmut Schuehsler, chief executive of regional private equity firm TVM Capital Healthcare Partners, said: “Although recent emerging market volatility may make fundraising challenging, it also creates attractive investment opportunities, especially in defensive sectors such as healthcare that benefits from solid long-term fundamentals.”
This year’s sum, $992 million, was raised by 12 funds, the largest of which were the North Africa Fund II from Abraaj Group, which raised $375 million, and the Duet-CIC Egypt Opportunities Fund, which got $300 million, according to the data from Zawya, a data provider owned by Thomson Reuters that collaborated on the report.
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