London-based Capital Trust has announced plans to launch a direct investment fund that will target the private equity markets of the Middle East and North Africa. The company is hoping to raise $75 million-100 million through the Menavest fund, which is due to be launched within a month, according to head of corporate finance Ali Habbas.

The fund is seeking primarily to attract European and US investors, but will also invite Middle East institutional and individual investors to participate. 'We are targeting Western institutions that are interested in investing in the Middle East but don't have much experience in the region,' Habbas said. The Middle East has been resilient to the effects of the East Asian crisis, and is attractive to institutions wishing to diversify into new emerging markets, he said.

The fund will focus on direct investment in small to medium-sized companies in Egypt, Jordan, Lebanon, Morocco, Palestine, Syria, and Tunisia. It may also participate in privatisations if suitable opportunities arise.

Habbas is confident of a positive response. 'There aren't that many funds targeting private equity in the Middle East. Most are investing in the region's capital markets,' he said. 'We have already seen a lot of interest from both institutional and individual investors from the US, Europe and the Middle East.'

The launch of the Menavest fund forms part of Capital Trust's long-term strategy to increase its focus on the Middle East while maintaining its activities in the US. The company's Beirut representative office began operating in April and currently has a staff of three, with more to be appointed if needed. 'We have set up the Beirut office for regional purposes. We have investments and act as investment advisers for companies in Syria, Lebanon, Jordan and Morocco, so it made sense to open a regional office,' said Habbas. 'We also needed a marketing presence in the region.' Capital Trust may open offices elsewhere in the Middle East if the need arises.