GCC private equity groups are overlooking valuable investment opportunities in emerging markets by focusing too closely on their home turf, according to an industry head.
“I think the biggest limitation of GCC private equity firms is that they’re so Gulf-centric,” says Tamer Makary, executive director of Arqaam Capital, a Middle Eastern-based investment bank that focuses on mid-market private merger and acquisition (M&A) opportunities.
“A virtually untapped area is regional private equity specialising in cross-border acquisitions into other emerging markets, such as Africa and Southeast Asia.”
Arqaam is currently working as the adviser to Indonesian lender Bank Kesawan’s $81.7m rights issue for which it secured Qatar National Bank, the largest Qatari bank by asset size, as a potential standby buyer in September this year. The issue is planned for the first quarter of 2011.
“The QNB deal will be the first Middle Eastern investment in Indonesia’s conventional banking industry,” says Makary. “To date, Malaysia has been the hub for Arab investment but the Indonesians are very interested in receiving Gulf money.”
Arqaam also currently holds several mandates to find acquisition targets in logistics, agriculture and healthcare in Kenya.
“My issue isn’t competition – it is scalability,” says Makary. “There are incredible opportunities across the industry spectrum in both Kenya and Indonesia. Unlike the Gulf, which is a very service-oriented market, these countries are endowed with huge natural resources, large populations and low market penetration.”
Arqaam is also seeking to enlarge its regional footprint through acquisition of businesses in Egypt, Saudi Arabia and Qatar.