The fund, which will be called Estithmaar Ventures TMT Fund, is aiming to raise $100 million. It is understood that Deutsche Bank will itself place $25 million and that a further $25 million is to be provided by the investment office of the government of Dubai. The investment office was formally set up last summer and became operational towards the end of the year.
The remaining $50 million will be marketed internationally, but it is expected the bulk will be raised from GCC markets. ‘We are hoping to get a final close by the end of 2002, but this might stretch over into the first quarter of next year,’ says a Deutsche Bank executive. ‘However, there is a possibility that we will start investing before the end of the year.’
All the funds raised will be invested in Dubai’s fast-growing TMT sector that is centred in the Dubai Internet City and Dubai Media City, which opened for business in late 2000 (MEED 10:11:00, Cover Story).
‘This is principally an initiative of the government of Dubai,’ says the executive. ‘It is part of their programme to attract inward investment and to promote Dubai as a regional hub for the TMT sector.’
Estithmaar Ventures is aiming to make between five and 10 investments. No single deal will account for more than 20 per cent of the fund’s capital. ‘The number and size of the investments will be dictated by the characteristics of the deals we look at. We have an opportunistic approach,’ the executive says. ‘We’ve already got four or five deals in the pipeline.’
The fund has a closed-end structure and a 10-year life cycle. Exits from investments are expected to be predominately through trade sales. ‘As we are hoping that some of the investments will be made with strategic partners, we will be looking to exit through sales to them,’ says the banker. ‘The public exit route is underdeveloped in the region at present, but if markets become more liquid and accessible, we would look at that route too.’
Estithmaar Ventures will be only the second private equity fund raised by an international bank for investing in the region. The first, the HSBC Private Equity Middle East Fund, has a broader regional remit and will invest throughout the GCC with no sectoral constraints (MEED 31:5:02).