Downturn offers an opportunity in the Gulf

Even in a downturn there are opportunities. And if you have money, are willing to spend it and have local market knowledge, there are plenty in the region.

Regional private equity houses such as the UAE's Abraaj Capital and Egypt's Citadel Capital tick all three boxes. Having raised large amounts of money during the boom years, the industry has $11bn in funds that it is keen to put to work, and is well connected in key local business communities.

Of course, a willingness for others to sell is equally important. In the past, private equity has struggled in the Middle East because so much business activity is controlled by government-owned firms or large, family-owned trading houses, neither of which like to admit failure by selling businesses.

But these days, governments are increasingly keen to bring in private sector money and expertise to help boost their economies, and companies needing to raise funding have few other places to turn - banks are lending only sparingly and most stock markets are shut to new share issues.

Investments in the expanding healthcare, education and power and water sectors all offer interesting opportunities, as does backing distressed companies.

When to invest is still a difficult decision to make when prices could yet fall further. But reports in early May that Abraaj Capital wants to take a stake in UAE ports operator DP World are a sign that the market could now be close to the bottom, say industry experts.

Adding to the pressure is the fact that regional private equity houses know that if they wait too long, they could find themselves forced out of deals by larger international rivals. For now, the window of opportunity is wide open to firmly establish private equity investment in the region for the first time.