The fund will follow the same investment strategy as Abraaj’s two previous special opportunities funds, which invested in listed companies, initial public offerings and companies preparing to list on public markets. However, the new fund will be larger than the previous ones, the second of which totalled $128m.
“We have a wide geography and our strategy is opportunistic,” says Mustafa Abdel-Wadood, managing director of Abraaj Capital. “It is a hedge fund strategy. The last fund [of this type] performed very well in absolute terms in an era of poor stock market performance.”
Abraaj expects to have invested all of its $500m Buyout Fund II by the end of the first quarter. The fund takes majority or controlling stakes in companies and is due to make its final deals.
“That fund is actively investing and is nearly fully committed,” says Abdel-Wadood. “Then we will see some exits.”
The private equity firm also expects to have invested all of its $2bn Infrastructure & Growth Capital Fund by the end of the year. The fund makes sharia-compliant investments and targets a range of sectors including oil and gas, telecoms, power and health.
The investment activity follows a series of sales of its stakes in other companies in recent months.
In December, Abraaj sold its stakes in Jordanian internet portal Maktoob.com to hedge fund Tiger Global Management. In the same month, it sold its holding in Dubai-based contractor Arabtec Holding on the Dubai Financial Market, which was held by Abraaj Real Estate Fund.
In November, the firm sold its investment in Egyptian investment bank EFG-Hermes to Dubai Financial Group, part of Dubai Holding, for $1.1bn.
Abraaj will sell more of its investments over the course of the year as its first buyout fund sells its remaining holdings in UAE supermarket chain Spinnys, Pakistan’s BMA Capital Management and Jordan Aircraft Maintenance by the end of 2008.