HSBC has seeded the fund with $33 million and a further $85 million has been raised by regional institutional investors.

The fund has also announced the closure of its first investment, buying into Bahrain-based Havelock AHI, a furniture manufacturer for the retail, hotel and leisure sectors in Bahrain.

The fund is a five-year closed-end vehicle, which is aiming at generating an internal rate of return of 25-30 per cent, according to David Knights, a director of HSBC’s private equity business in the Middle East.