Firms raising money include Bahrain-based Investcorp, seeking $1bn for its Gulf Growth Capital Fund, the UAE's Millennium Finance Corporation, raising $1bn, and Kuwait's Global Investment House, which is raising $1.5bn for its Global Buyout Fund.

“Today we have more funds and bigger funds, and a better understanding of private equity [in the region],” says Al-Ansari. “Private equity has the potential to bridge funding shortfalls in the coming year.”

DIC is a partner with HSBC and Abu Dhabi-based Oasis International Leasing in the MENA Infrastructure Fund, which held its first closing at $300m in September. It is looking to raise a further $200m by early 2008, by which time it should have made its first two investments, says Robert Swift, CEO of MENA Infrastructure Fund. The fund will invest in power, water, transport and energy projects.

“I'm quite excited by utilities,” says Swift. “Five of the six GCC countries are tendering IWPPs [independent water and power projects] all at the same time. There are a number of deals and they are big.”

The pace of private equity transactions is picking up across the region, although from a small base. Since 2002, private equity investment in the region has totalled $3.7bn, compared with $218bn invested in the US and $191bn in Europe.

“The region is behind Europe where you see a private equity player in almost every deal,” says Swift. “But the GCC is moving along this trend line.”

The bulk of investment is in Egypt, where about two thirds of funds are invested, followed by the UAE and Saudi Arabia.

“There is a cultural preference for equity financing and you cannot do leveraged buyouts in the same way that you would in other parts of the world,” says Al-Ansari.

“You cannot put together structures that we would do with our eyes closed elsewhere.”