The private equity sector in the Middle East is still up to 10 years away from being an attractive investment opportunity for international firms, according to Fady Michel Abouchalache, chief executive of France’s Quilvest.
“We think there needs to be another five to 10 years of development for the Middle East markets to become really attractive,” says Abouchalache.
“Despite a lot of factors being supportive of the private equity industry in the region, including growing population and business-friendly governments, there are still several obstacles to an active private equity industry developing. The concept of buying and selling companies is moving on, but at a slow pace,” says Abouchalache. Coupled with this, the lack of development in the local equity markets, including the current dearth of new flotations, low levels of trading, make it difficult for private equity firms to exit their investments.
“These impediments are slowing down the development of the private equity in the Middle East,” he adds.
Before the financial crisis, many of the world’s largest private equity firms were targeting the Middle East as an area for investments, after previously using the region as a place to raise capital to invest elsewhere. Abouchalache says it is likely the Middle East will remain more active as a place to raise capital than invest it.