22 September 2012

Deloitte Survey: Investment activity to increase in MENA Private Equity market in next 12 months

- Fifth Deloitte Private Equity Confidence Survey is issued 

18 September 2012 – The fifth Deloitte Private Equity Confidence Survey has just been issued, gauging the views of the regional Private Equity (PE) community, across the Middle East. The results of the survey reflect a bounce back in confidence amongst regional General Partners (GPs) and a more positive outlook for the long term prospects for PE in the MENA region. 

“This edition of the Deloitte Private Equity Confidence Survey is perhaps the most insightful so far. The general sentiment amongst the MENA PE Community is one of optimism,” said Richard Clarke, managing director, Transaction & Restructuring Services, Deloitte Middle East. “While in the past, GP’s may have been hoping for increased deal activity and a bounce back in returns, today’s optimism is supported by our own experiences – there really has been and continues to be an increase in PE backed deals. With the regional political situation starting to settle down, the investment environment is now more attractive than it has been since the beginning of the uprisings of the Arab Spring and moreover the global crisis,” he added. 

This is supported by the fact that over 75% of respondents expect investment activity to increase in the Middle East over the next 12 months, reflecting the continued confidence in finding suitable investment opportunities and a general willingness to deploy capital for the right assets. 

Exit activity is also expected to see a pickup, after a lull in the last few years, according to the Deloitte survey. “Now more than ever, GPs are focusing on leveraging off intermediaries to help them find the right route to market whilst also assisting them to prepare portfolio companies for exit,” said Raj Mehta, Director, Transaction & Restructuring Services, Deloitte Middle East “Despite the challenges with exiting, GPs still expect to focus the bulk of their time on sourcing new investment opportunities. This says two things - that deals are still there to be done, and that fund managers are very much in deployment mode,” he added. 

In terms of the sectors of most interest to PE investors, the Deloitte survey finds that the main focus remains on the defensive sectors, such as education, healthcare and oil and gas services. However, there is also a growing interest for growth and demographically-linked sectors, such as consumer retail and food, which are expected to attract the most attention amongst the PE Community in the coming year. 

Regional GPs are reporting increasing signs of optimism regarding the long term prospects for the MENA PE sector, with strong domestic growth, the abundance of oil and natural gases and favourable demographics cited as just some of the many reasons for confidence returning to levels seen pre-crisis in the region. 

Source: Deloitte