(MENAFN - Khaleej Times) India-based private equity firm sage capital said on thursday that it would launch funds with a corpus of around 1 billion targeted at the gcc africa and india markets in the second half of 2014.
the fund will seek to invest in real estate projects across the middle east and north africa and also in small- and medium-sized companies that have the potential to be regional leaders regardless of the stage of their growth.
speaking to khaleej times manish kanchan founder of sage capital said the middle east region offers a unique combination of scaled-up economies strong gross domestic product growth low inflation positive current account balances and robust state finances that together grant relatively better immunity from global imbalances and macroeconomic risks.
“the gcc alone with a gdp of over 1.5 trillion has an economy that is almost as large as india and growing at four to five per cent with low inflation of two to four per cent. saudi arabia and the uae are the largest economies in the region but kuwait and qatar at around 200 billion also offer scalable opportunities. egypt iraq and iran could blossom into attractive markets if the geopolitical issues are effectively addressed” he said. kanchan said there is significant interest among middle east-based investors for indian private equity funds and fund managers.
“they see a clear advantage in backing indian fund managers targeting investments in the middle east given their experience of partnering with companies that operate in a much more challenging regulatory and business environment in india” kanchan said.
several large middle east-based limited partners have been investing with indian general partners both in conventional private equity and real estate. they include gulf investment corporation the abu dhabi investment authority and the qatar investment authority.
kanchan said the region was in a phase of transition as nations de-risk their economies by diversifying away from oil exports and witness surging domestic consumption and investment. besides non-oil growth is also considered critical to bolster employment creation and address demographic challenges.
“while the gcc’s oil growth will be flattish going forward non-oil growth is expected to boost gdp growth and expand at five to seven per cent annually. economic activity will continue to be driven by construction and trade spurred by high public infrastructure spending and rising private sector credit.”
kanchan said real estate is an obvious beneficiary of this trend as are companies operating in sectors such as construction banking and finance. private consumption-led sectors will also see considerable traction as the per capita incomes in the region are already comparable to india’s.
“private equity funds can capitalise on this opportunity by partnering with real estate developers and small- and mid-sized enterprises” he said.
there is a lot of excitement and anticipation with regards to dubai’s hosting of expo 2020 together with the 2022 fifa world cup in qatar which many believe could fundamentally reshape the way business is done in the region he observed.
quoting estimates kanchan said dubai expo 2020 is expected to add in excess of 20 billion to the uae’s gdp over the next five to six years and potentially give a major fillip to the overall growth in the region as a whole. the government is believed to have allocated 8-10 billion for the investment leading up to the event that will have a cascading effect on private investment as well.
“expo 2020 will throw up numerous opportunities in infrastructure logistics construction real estate hospitality and tourism energy and utilities and banking and finance. the sheer scale of funding requirements and the resultant revenue potential will act as a magnet for private equity funds targeting the region” kanchan said.
he said enterprises from around the world are gravitating towards the middle east because it offers a large and growing market. moreover the region also ranks high on ease of setting up and conducting business.