Kuwait-based Global Investment House has announced that its Global Buyout Fund has received investment commitment exceeding USD500m at its initial closing.
Kuwait-based Global Investment House has announced that its Global Buyout Fund has received investment commitment exceeding USD500m at its initial closing. The fund aims to take majority equity stakes in established private and listed companies in the Middle East and North Africa as well as in Turkey, China, India and Pakistan.
Global executive vice-president Omar El-Quqa says the investor response from institutional investors, pension funds and family offices both from the Middle East and worldwide has reaffirmed the firm’s belief in the fund’s strategy.
The private sector in the region has traditionally been dominated by family businesses, El-Quqa says, making it imperative for private equity funds to develop a deep understanding of the local culture and business practices and to have strong relationship in order to generate deal flow.
According to Shailesh Dash, senior vice-president and head of private equity investments at Global, the fundraising brings his team’s total assets under management to more than USD1.5bn. He sways the fund’s success in attracting USD500m within a very short period – it was launched in March this year – was down to the team’s track record of return on investment with the other private equity funds it manages
The Global Buyout Fund has already concluded its first investment in Omani steel producer Al Jazzeera Steel and is currently finalising further transactions involving a Turkish financial services company, a building materials firm and a Gulf pharmacy chain. These investments would mean the fund had deployed nearly 60 per cent of initial closing commitments.
Global’s private equity team, which has grown to more than 30 members, has completed 44 investments across the Middle East, North Africa, Turkey and Asia.
The fund has been distributed to institutions in Asia, Europe and North America by Bear Stearns International and JP Morgan Cazenove, and Dash notes strong interest from pension funds, family offices, university endowments and financial institutions worldwide.
‘This is one of the first truly regional funds to be showcased to international institutional investors, not just with the objective of attracting capital, but also to highlight the region as an alternative investment destination in the emerging world,’ he says.
The fund is planned to have an investment period of three years, but on a fast-track basis could be fully invested within two years. The investment management team completed more than 40 transactions involving some USD700m within a period of 18 months for the Global Opportunistic Fund and Global Opportunistic Fund II.
The fund, which has a target size of USD1.5bn and expects to invest in around 20 companies, is targeting an annual internal return of return of 20 per cent over the life of the fund. The fund has a challenging hurdle rate of 15 per cent without catch-up, in contrast to other funds that have no or single-digit hurdle rates.
Global Investment House, an investment company incorporated in 1998 and listed on the Kuwait, Bahrain, and Dubai stock exchanges, has branches and affiliates in Abu Dhabi, Bahrain, Dubai, Jordan, Qatar and Sudan, and had assets of KWD2.35bn (USD8.4bn) under management at the end of September.
