New York-based Alliance Capital Management has become the latest fund manager to launch a fund aimed at investing in Middle East stocks and shares. Alliance Capital, a subsidiary of the US’ Equitable Insurance, will close the initial four-week offering period for the open-ended fund on 24 January.
The Alliance Middle East Opportunities Fund is expected to make an initial investment of $40 million, with shares priced at $10 each. About 60 per cent of the funds will be invested equally in Turkish and Israeli shares, and the remainder will be split between Jordan, Morocco, Egypt and Oman. Funds will also be invested in other markets as opportunities open.
The fund will be registered in Luxembourg, but will be managed from the company’s Istanbul office, which has been open for about 12 months. The company also has an office in Bahrain.
Capital Alliance says the fund will take advantage of the privatisation programmes and undervalued shares. It also says the economic outlook for the region is promising over the next five years, with most of the countries under consideration reporting low or falling inflation and carrying out successful economic reform programmes.
Alliance Capital is the second fund manager to include Israel in the same portfolio as Arab states. Foreign & Colonial Emerging Markets launched a closed-end fund covering the same countries at the end of 1994, which is now registered on the New York stock exchange. A total of $42 million was raised, below the target figure of $60 million.
Peter Douglas, head of marketing for Foreign and Colonial, says poor market conditions in New York and uncertainty surrounding the peace process at the end of the year were to blame for the lack of interest. However, he is optimistic about the performance of the fund. ‘A lot of other financial institutions are now looking at the region,’ he says, ‘I think 1995 will be super year for markets in the Middle East.’
Two US fund managers, Merrill Lynch and Fidelity, have received approval from the Securities & Exchange Commission to list Middle East funds in New York, but neither firm has announced a launch date.
The UK-based Investment Management is still assessing plans for a $50 million fund, to be called Fleming Arab Countries Fund. Officials say the decision was delayed from November 1994 because of a quiet market conditions.