The next five years: MENA PE report
Following the boom years of 2007-2008, the global financial crisis curtailed easy access to capital while earnings suffered, eroding the valuations of many companies globally and also in the Middle East and North Africa (MENA).
The resulting decrease in opportunities for profitable exits from investments by Private Equity (PE) firms in the region further constrained the flow of investment capital.
This, along with the political uncertainty that began in 2011, created greater uncertainty for General Partners (GPs), which made them less willing to commit capital, even if the dry powder is already available. Besides the lack of willingness to invest, there was also the problem of finding quality deals.
The owners of the businesses that comprises the majority of investment targets in the region were largely unwilling to accept terms that reflected these difficulties. Thus, the financial crisis compromised the ability of the GPs to make deals: they became caretakers rather than dealmakers.
The financial crisis combined with the current political tumult has raised questions about the PE industry in MENA: What has been the impact of the Middle East unrest on PE firms? What is the degree of confidence of the industry considering the new regional realities? Looking ahead, what directions will GPs take? Where will they invest? How will they raise capital? When and how will they exit? What are the main challenges ahead? How will the competitive landscape develop?
This report, produced by PwC and INSEAD Abu Dhabi, will attempt to answer some of these questions.
