Abraaj sees buyout chances in Mideast

Bloomberg

The Dubai-based company, which manages more than $7.5 billion in assets, is considering dozens of buyout opportunities, a "fair proportion" of which are listed companies it wants to take private, Arif Naqvi, 48, Abraaj’s group chief executive officer, said in an interview late Tuesday. The best opportunities are in Saudi Arabia, Algeria, Libya, Turkey and India in industries including oil and gas, health care and education, Naqvi said.

Shopping spree
"There are companies on the market today that I would salivate to buy at these levels," Naqvi said at his Emirates Towers office in Dubai. "So will you see us buying companies on the stock market and taking them private? Without question, yes."

Share prices in Gulf Arab countries have crashed since the onset of the global credit crisis as foreign investors fled, lending grew scarce and on concerns the region’s once booming real-estate industry is poised for a slowdown. Saudi Arabia’s Tadawul All Share Index fell 56 percent in 2008, while benchmark indices in Dubai dropped 72 percent and in Abu Dhabi by 47 percent.

Abraaj, set up in 2002, accounts for about 25 percent of all private equity funds raised in the Middle East and its co-investors include the region’s biggest sovereign and pension funds. It invests in Gulf Arab states, North Africa, Turkey and South Asia and has posted returns of 2.9 times cost from its 17 completed deals. In 2007, Abraaj completed a $1.41 billion acquisition of Egyptian Fertilizers, the region’s largest leveraged buyout.

Abraaj will wait until share prices of target companies have been stable for three to four months before making offers, Naqvi said. At this stage an offer will be "termed opportunistic." Abraaj is "having a dialogue" with the shareholders or managements of several companies that it didn’t identify. Loans to part-fund some buyouts are still available despite the credit environment, he said.