The MENA Private Equity Association, a non-profit organisation supporting the development of the private equity and venture capital industry in the Middle East and North Africa, launched today its ninth “MENA Private Equity & Venture Capital” Annual Report. According to the Report, which was compiled in collaboration with Deloitte and Zawya – Thomson Reuters, 2014 was a significant year for the industry and has demonstrated the highest levels since 2008 in investment values and fund raisings. 2014 has also seen growth in investment and divestment volumes compared to 2013.
The year was characterised by some of the largest private equity deals seen in the region. Fund managers had demonstrable success in assembling and working with consortium partners, including international private equity investors, to close major transactions. Overall, there was a sense of returning confidence and increased opportunities as the region continued to emerge from the impact of the Arab Spring.
Key highlights: 2014 Private Equity and Venture Capital in the Middle East Annual Report
– Total number of known investment volumes increased in 2014 to 72 compared to 66 in 2013. Values of disclosed investments has also seen an increase by 118 per cent to USD 1.5 billion. Notable transactions included Fajr Capital, Mumtalakat and Blackstone joining forces to invest in GEMS Education and a consortium including Fajr Capital investing in National Petroleum Services.
– Total funds raised in 2014 reached the highest level since 2008 at USD 1,229 million compared to USD 744 million in 2013. The average close size also increased to USD 103 million. There was a marginal increase in the number of closes in the year (three funds closed twice in the year) as fund raising in the region continues to be challenging for many market participants due to the limited number of GPs and concerns over geopolitical instability.
– In 2014, the greatest investment values were in oil and gas and demographic driven sectors such as education, services and food and beverage. Retail, healthcare and consumer goods were also core focus areas for GPs as defensive and consumer driven sectors continue to dominate investment focus.
– UAE and Saudi Arabia attracted over 75 percent of MENA investment activity by value reflecting their scale and stability and increased availability of larger target assets. The two countries accounted for a lower proportion of transaction volumes at 31 percent
– The value of investments in Egypt doubled over those seen in 2013 as a growing middle class and movement towards increased political stability remain key factors in attracting private equity investment.
– Disclosed divestment volumes increased in 2014 to 20 compared to 16 in 2014.
– The venture capital industry in 2014 remained broadly consistent with 2013. Investment activity in 2014 was led by Lebanon. The country is characterised by small and medium size companies. Support from the Lebanese Central Bank has further stimulated interest in investing in start-up companies and SMEs. Jordan, the UAE and Morocco were also notably active in 2014.