One fund will invest in unlisted distressed companies in need of financial restructuring, with a target rate of return of 25 per cent over five years.

The other will invest in listed companies with good growth prospects, targeting returns of 30 per cent over five years.

Jalil says TNI will start raising capital for the distressed companies fund by the end of November, with the aim of completing the process by 31 March 2010. The bank is already in talks with potential investors for the growth fund.

The distressed companies fund will target industries such as financial services and downstream manufacturing, and will be sharia compliant, while the growth fund will target sectors such as healthcare and education.

Jalil adds that the private equity industry in the Middle East has consolidated following the financial crisis. “If you counted up the number of entities still active in the private equity sector about 18 months ago it was more than 100,” he says. “We think that has now fallen to about 12 companies that actively have capital to deploy.”