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NBD Sana raises US$170 million for Middle East buyout fund
Source: BI-ME and Bloomberg , Author: BI-ME staff
Posted: Sun December 21, 2008 12:00 am

UAE. NBD Sana Capital, the private equity unit of United Arab Emirates’ Emirates NBD, raised almost US$170 million at its first close and is eyeing buyout opportunities in the Middle East, North Africa and South Asia.

“We are looking at a few very attractive deal opportunities, particularly in Turkey and India,” Suresh Kumar, group director at Emirates NBD, said in an interview in Dubai today. “There is no better time” for a private equity fund to invest considering the decline in valuations.

NBD Sana aims to raise the size of the fund to US$250 million in 2009 and eventually to US$500 million, Kumar said.

Gulf Arab economies have surged on the back of record oil prices and rising government investments, helping spur growth of private companies. Private equity investors in the Middle East manage more than US$25 billion, buyout firm Abraaj Capital said in October. Valuations in buyout deals are a quarter of the 15 times earnings before interest, taxes, depreciation and amortisation seen a year earlier, Mustafa Abdel-Wadood, Abraaj’s managing director, said at a conference in October.

“Private equity was one asset class, a little ahead of its time in terms of valuation and in terms of expectations on valuations, and the correction has certainly helped them,” said Kumar, also a chief mentor at NBD Investment Bank.

Share prices in Gulf Arab countries have crashed since the onset of the global credit crisis as lending grew scarce, foreign investors fled and on worries the region’s real-estate industry is poised for a slowdown. Saudi Arabia’s benchmark stock index has fallen 57% this year, while shares in Dubai have dropped 70% and in Abu Dhabi by 43%.

“I think the capital markets, especially equity capital markets, will start to come back possibly in the second quarter, at the earliest, but certainly in the second-half of 2009,” Kumar said. “The Sukuk and debt capital markets will perhaps take a little longer.”

NBD Sana was set up by NBD Investment Bank, a unit of National Bank of Dubai, which in October 2007 merged with Emirates Bank International to create Emirates NBD. The fund aims to invest in the Middle East, North Africa, Turkey and South Asia and in industries including telecommunications, media and technology, energy, healthcare and pharmaceuticals as well as retail, according to its Web site. State controlled Emirates NBD is the biggest Gulf Arab bank by assets.

NBD Investment Bank has applied for regulatory approval to change its name to Emirates NBD Capital, Kumar said. The investment banking unit expects to win mandates for private share placements, mergers and acquisitions, debt and balance sheet restructuring advisory.

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

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INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
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BAHRAIN. The "increasingly deregulated and competitive economic environment is facilitating rapid growth in business development within the private sector."
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INTERNATIONAL. Participants in the global oil market are eagerly awaiting the Opec meeting on November 27, which could potentially set the tone and the direction of oil prices.
INTERNATIONAL. In the end, it is unlikely that the territorial Islamic State can survive. The truth is that Turkey, Iran and Saudi Arabia are all waiting for the U.S. to solve the problem with air power and a few ground forces. These actions will not destroy IS, but they will break the group's territorial coherence.
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