Arab spring brings gloom for Middle East private equity
Middle Eastern private equity executives who had hoped that the Arab Spring would bring a pool of new investment opportunities are painting a sobering picture at a conference in Dubai, saying that fund raising is at low levels and investor confidence has plunged with the worsening political upheavals across the Middle East and North Africa region.
"We as private equity firms would like to forget about 2011 and pretend it never existed," said Emad Mansour, chief executive of Qatar First Investment Bank.
The Middle East private equity industry, which hoped that the impact of the global financial crisis is easing, was dealt another blow this year by the regional political upheavals that were unleashed by the toppling of the former regimes in Tunisia and Egypt.
Only eight private equity and venture capital deals were closed in the Middle East during the first seven months this year, according to Al Masah Capital.
That compares to 24 deals in 2010, and was down from 46 a year earlier, as the market continued to suffer from the aftermath of the global financial crisis, according to a report by the MENA Private Equity Association.
"The Arab Spring brought to the equation short-term volatility. Today, it's a challenging environment and the ultimate survival depends on performance," said Mustafa Abdul-Wadood, executive director at Dubai's Abraaj Capital. "Securing third party money is certainly your validation," he added.
A wave of protests in Tunisia led to the ouster of former President Zine al-Abidine Ben Ali in January and set in motion a dramatic popular upheaval across the Arab world. Hosni Mubarak was forced out of power in Egypt in February and Libya's Muammar Gadhafi was ousted last month.
"Political change doesn't necessary lead to economic change," said Oscar Silva, chief executive officer at Bahrain's Global Banking Corp. "I don't think it's tough to find deals but it's definitely tougher to make up your mind. The rules of the game are changing."