Q&A: Frederic Sicre, Executive Director, Abraaj Capital
Regional family-owned companies, multinational asset sales and expatriate-owned businesses are the areas in which Faisal Belhoul sees the highest growth. The aim is to deliver a minimum internal rate of return (IRR) of 25 per cent to investors.
More family-owned businesses will take the public-issue route to raise funds. IPOs do represent opportunities for private equity firms. IPO listings in the GCC have grown by 41 per cent between 2002 and 2006 compared to 25 per cent in the US.
The prospects for future growth will be greater and the share price of the company will be worth more on the first day of trading.
Sicre said: “For example, we were invited by the Government of Sharjah to take a strategic pre-IPO stake in Air Arabia. Since the IPO, we are seeing the share price appreciate. Ultimately, this will offer our investors a very good return.
“Private equity is being globally understood as an asset class. The same holds true in the UAE and our region, and institutions such as banks, family groups and pension funds are increasing their allocations to private equity.”
All of this has resulted in a compounded annual growth rate of 90 per cent in funds raised between 2002 and 2006 in the region, compared to 41 per cent in the United States and Europe over the same period.
“The interesting fact is that almost 75 per cent of the fund managers are headquartered in the UAE. That’s because the Emirates is creating an environment which attracts talent and the skills needed to operate a successful private equity firm,” said Abraaj Capital’s Executive Director.