Dubai-based Abraaj Capital announced on 17 December that it had closed its latest private equity fund a month ahead of schedule because of overwhelming demand. The $500 million Buyout Fund II closed oversubscribed by $350 million at the end of November.

Institutional investors, including international firms and regional state-owned pension funds, contributed $300 million to the fund, which was launched in May. The minimum investment was $5 million. The fund will invest in 20 countries across the region. Abraaj is conducting due diligence on a number of companies and plans to deploy the fund in early 2006. A maximum of 15 per cent, or $75 million, of the fund will be invested in a single enterprise.

'The fact that we are able to raise this much money through a private equity fund is startling,' says Abraaj chief executive officer Arif Naqvi. 'Large investors realise private equity [investment] is an excellent insurance against public markets.'

Naqvi says Abraaj is looking to partner with governments in the region as they privatise public industries. It is also considering launching a sharia-compliant fund and a hedge fund. 'Hedge funds are moving into the private equity space. What's to stop private equity moving into their space? You come into my house, I'll come into yours,' says Naqvi.

The Abraaj Buyout Fund II brings to five the number of private equity vehicles managed by the firm and its total assets under management to $1,000 million.