Private equity and the Arab Spring: Tentative steps

The hot money may rush in and out—Egypt’s Case 30 index has posted a 29.3% gain so far this year, for example, after shedding 49.3% in 2011. But a more meaningful gauge of investors’ perceptions of the Middle East and north Africa is the flow of longer-term money.

The private-equity industry is still a long way off its pre-crisis peaks. The high point was 2007, with $4.1 billion of deals (these figures exclude Turkey, a hot destination which counts as European in the industry data, and Israel, an entrepreneurial ecosystem all of its own). Many of the regional funds that operated back then have closed, and only the most intrepid investors, most of them local, remain active. The average deal size has dropped from $172m in 2007 to $30m last year.

If the glory days are very much in the past, the numbers suggest that investors are slowly regaining their appetite after the initial shock of the Arab spring. Deals worth $475m have been done so far this year, according to Dealogic. That already outstrips the 2011 tally of $237m.