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.